Comments on: Now “Private Equity Replication”? http://allaboutalpha.com/blog/2007/12/17/now-private-equity-replication/ 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 By: Walt French http://allaboutalpha.com/blog/2007/12/17/now-private-equity-replication/comment-page-1/#comment-119359 Walt French Tue, 24 Jun 2008 13:26:35 +0000 http://allaboutalpha.com/blog/2007/12/17/now-private-equity-replication/#comment-119359 A second valuable use of an index is to see how much of any single fund's idiosyncratic risk actually has any return associated with it. Just as comparing an equity mutual fund to an index lets one see whether the fund's idiosyncratic returns have a positive or (the typical case) negative average return (net of fees). So, a PE fund that actually is adding value to a levered equity strategy in similar stocks should WELCOME the comparison. Those who make bad bets, or wring out huge expenses from their investors are the ones you'll hear squawking the loudest about how irrelevant the replication is. A second valuable use of an index is to see how much of any single fund’s idiosyncratic risk actually has any return associated with it. Just as comparing an equity mutual fund to an index lets one see whether the fund’s idiosyncratic returns have a positive or (the typical case) negative average return (net of fees).

So, a PE fund that actually is adding value to a levered equity strategy in similar stocks should WELCOME the comparison. Those who make bad bets, or wring out huge expenses from their investors are the ones you’ll hear squawking the loudest about how irrelevant the replication is.

]]> By: Tuesday links: share count shrinkage « Abnormal Returns http://allaboutalpha.com/blog/2007/12/17/now-private-equity-replication/comment-page-1/#comment-63386 Tuesday links: share count shrinkage « Abnormal Returns Tue, 18 Dec 2007 17:07:09 +0000 http://allaboutalpha.com/blog/2007/12/17/now-private-equity-replication/#comment-63386 [...] Forget hedge fund replication, is it now time for private equity replication? (All About Alpha) [...] [...] Forget hedge fund replication, is it now time for private equity replication? (All About Alpha) [...]

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