http://allaboutalpha.com/blog/2007/06/18/bgi-why-buy-pre-packaged-alpha-beta/ A finance blog about hedge funds, portable alpha and alternative investing. Thu, 09 Feb 2012 19:03:08 +0000 http://wordpress.org/?v=abc hourly 1 http://allaboutalpha.com/blog/2007/06/18/bgi-why-buy-pre-packaged-alpha-beta/comment-page-1/#comment-11993 allaboutalpha.com: Welcome to AllAboutAlpha.com Thu, 21 Jun 2007 01:56:46 +0000 http://allaboutalpha.com/blog/2007/06/18/bgi-why-buy-pre-packaged-alpha-beta/#comment-11993 [...] When you think about, this makes a lot of sense. Â Most costs (save performance fees) are unrelated to performance.  They are essentially a guaranteed negative return with basically no volatility.  If you removed the negative sign, it would be quite apparent that this return would be tantamount to (precious) alpha. Â Our example from a few days ago of the hypothetical fund charging 2% in a year when gross returns amounted to 2%, clearly illustrates that fees basically net-out against alpha.  The numbers may be small compared to overall returns, but are gigantic compared to the typical amount of alpha delivered.  In other words, cutting fees amounts to a serious alpha ”gimme“. [...] [...] When you think about, this makes a lot of sense. Â Most costs (save performance fees) are unrelated to performance.  They are essentially a guaranteed negative return with basically no volatility.  If you removed the negative sign, it would be quite apparent that this return would be tantamount to (precious) alpha. Â Our example from a few days ago of the hypothetical fund charging 2% in a year when gross returns amounted to 2%, clearly illustrates that fees basically net-out against alpha.  The numbers may be small compared to overall returns, but are gigantic compared to the typical amount of alpha delivered.  In other words, cutting fees amounts to a serious alpha ”gimme“. [...]

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