Dear Alpha Mail Subscriber:
George Bernard Shaw famously observed that "youth is wasted on the young." But had the playwright been a hedge fund manager, he would have likely observed how alpha is wasted on the young - and small - hedge funds, since those are the funds that seem to produce the outsized returns. What hedge fund wouldn't rather log a +30% when they had $5 billion versus when they were starting out with, say, $100 million?
Two new studies on the theme hit the "Top 10" this month at AAA and both address the conspiring effects of youth and size. And both reinforce the commonly-held notion that youth is a good thing. But that wasn't the only performance-related theme that ran through the pages of AAA last month. We also poked and prodded at the link between return dispersion and overall performance; it appears we may be experiencing an ironically painful calm after the market storm of the past few years. We also mused about whether the additional liquidity requirements of long/short mutual funds and investable hedge fund indices can act as headwind on returns. Guest contributors Chris Addy, CEO of Castle Hall Alternatives, and Mikhail Iliev, head writer of the website Who's In My Fund?, also chime in with cogent analyses of hedge fund fees and recent SEC enforcements. And if none of that sounds interesting, check out the other entries in last month's top 10 posts, covering commodities, the VIX and career prospects of hedge fund marketers. |
Last Month's Most Popular Posts |
- Young bucks challenge for supremacy but are fought back in 2009: Study
Does size matter? How about age? An annual study indicates it was best to be a "tenured" hedge fund, but not a "large" hedge fund in 2009.
- Finding money where there's no liquidity
Retail and high net worth investors can now gain access to hedge funds through a number of more liquid vehicles. But is their liquidity one of the very reasons their performance may be lower?
- Alpha dogs of the hedge fund industry found to have taste for beta
Emerging managers appear to have delivered better raw returns than big hedge fund managers in 2009. But what happens when you measure their alpha?
- Analysis suggests critic of performance fees dramatically misjudges size of the manager's slice
Wondering how much of the pie really goes to the manager? Read on.
- Is the Commodity Carry Trade the best way to find alpha buried in commodities?
As always, the key point in commodity investing: it doesn't have to be directional to be lucrative.
- Dead air on Lake Hedgistan as managers wait for a breeze
By the end of Q3, the headwinds of 2008 and tailwinds of 2009 had become a distant memory. By comparison, this year looks like a it may be remembered as dead air.
- SEC Insider Trading Enforcement: A New Foreboding Tune For Investors
Will the SEC's new tough-guy schtick lead to a "run on the bank" at some hedge funds?
- New "Alpha Index" helps trade apples against oranges
Inventor of VIX adds a new flavor to the fruit salad of financial indexes.
- California says "no" to "Prop 19," but grass is still greener on that side
During our trip to California, locals voted to keep their lawns weed-free for the time being.
- Note to hedge fund marketers: The grass is starting to look a little greener on your side again
Despite an increased focus on attracting "stickier" institutional assets and more interest from investors in hedge funds, marketers are still having somewhat of a tough go "movin' on up" in Hedgistan.
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If you ever feel like scaring yourself, here are three choices: rent the movie "Paranormal Activity," bungee jump into a volcano blindfolded, or listen to a lecture by Marc Faber of the Gloom Boom & Doom Report.
CAIA members in Los Angeles opted for the third choice last month when they invited the noted pessimist to address their chapter in Beverly Hills. After joining them for a lesson on how the world will end, I met up with a few readers and CAIA members in LA before delivering a couple of lectures of my own on alternative investments at USC. It was great to catch up with a few of you in Sacramento and Seattle after that.
Interest in alternative investing is as high as ever in Montreal, where I chaired a Bank of Montreal Hedge Fund Symposium, and in Toronto, where I attended a CAIA Chapter event on Tail Risk - both sold out. AI was also on the minds of attendees at Merrill Lynch's annual Global Wealth Symposium in Orlando where I had the pleasure of presenting some of the research we have covered on AAA over the past year.
If you're in New York, and a client of alternative investment behemoth Investcorp, I hope to see you at the firm's annual hedge fund research conference on December 6th. And if you live in São Paulo, Brazil, you'll want to check out the cocktail party hosted in part by CAIA on December 9th as a way to help coalesce a network of AI professionals in that great city. It's being held at the Emiliano Hotel and, as of this writing, it was about 90% subscribed. I look forward to seeing you there!
By the way, we're collecting final applications for my successor as the new Managing Editor of AllAboutAlpha.com. So, if you have extensive writing, alternative investment, and social media experience, and you want to run one of the most widely-read websites about the alternative investment industry, then we want to talk to you. For more details about this position, please click here. Until next month, happy alpha hunting.
Chris
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December 8, 2010 |  | |
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