Anyone Here Seen Alpha?

CAPM / Alpha Theory 28 Aug 2006

By: Jack Willoughby, Barron’s
Published: March 27, 2006

This article discusses Duke professor David Hsieh’s comments that capital markets may contain approximately $30 billion of “inefficiency” and therefore $30 billion of “alpha” per year. 


“Everyone talks about the hunt for alpha — a return above the overall market’s average — and how it can cause funds to take on too much risk. But no one has dared try to snare an alpha in the wild, and haul it back to captivity.

“Until now, that is. David A. Hsieh, (pronounced Shay), a finance professor at the Fuqua School of Business at Duke University, estimates that the $1 trillion hedge-fund industry is chasing a mere $30 billion in alpha per year. That’s precious little to support the hefty fee-generating machinery, ostensibly developed to scoop up excess return.”

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