Passive vs. Active Investment in Hedge Funds

By: Sandra L. Manzke, MAXAM Capital Management
Published: 2006

Here’s a question: is a passive investment in alpha-producing hedge funds an oxymoron?

If a return stream can be replicated with a passive investment, then isn’t it beta?  This is certainly the case when it comes to index investing.  But doesn’t the very existence of a risk premium on a defined “asset class” (we hate using this term to describe hedge funds) mean that there are systematic risks that earn a market-appropriate level of compensation? 

Unfortunately, this article doesn’t really provide answers.  But at least it raises the right questions. 

Read Full Article (free registration required)

Be Sociable, Share!

Leave A Reply

← Send in the clones EVENT: Alternative Beta →