Credit Suisse Aims To Replicate Hedge Fund Returns

Credit Suisse is turning to a trio of academics to give their investors alpha without actually investing in hedge funds. The firm’s Beta Strategies group has formed a partnership with hedge fund and alternative beta research specialists William Fung, David Hsieh and Narayan Naik to develop alternative beta strategies to replicate the risk and return characteristics of hedge fund strategies.

Fung and Hsieh, of the London Business School, and Naik, of Duke University, are widely recognized as pioneers in researching the fields of alternative beta and hedge fund replication, having explored these topics from an academic perspective since 1994.

“Institutional investors demand a detailed understanding of the return sources in their portfolios and are willing to substitute alternative beta factors through cost-effective replication strategies,” Oliver Schupp, head of Beta Strategies at CS, said.

“This new investment approach may ultimately allow investors to tactically adjust their portfolios to lower the expense ratio, enhance liquidity, hedge long positions and obtain a desired correlation.”