Dear Alpha Mail Subscriber:
If you are reading this at your desk, congratulations on not losing your job in the latest round of financial layoffs. If you are in your home office wearing a robe and fuzzy slippers, you have our condolences.
The calamity in the financial markets is spurring a backlash against complex financial instruments such as portable alpha, 130/30, liability-driven investing, alternative beta, and hedge funds. Which leads us to the salient question in this calamitous time: where will these investors go?
The impact of these events on the future of the hedge fund industry will likely depend not on this year's returns, but on where investors put their money after redeeming. In the short run, cash is king. But what about 2009? Hedge funds may have had their worst month in history last month. But the equity markets didn't really dazzle either.
Have the fundamental forces that gave birth to portable alpha, LDI, alternative beta and the hedge fund industry itself been extinguished? Probably not. In fact, history may remember this period as one where an enlightened approach to portfolio management proved its mettle.
This, or simply that US government became one giant ETF that held the entire economy in it - the "GDP ETF" - thus putting an end to active investing one short-ban at a time.
Who knows? But it gives you a good reason to turn off CNBC for a while and read AllAboutAlpha.com.
