Friday, 27 November 2015
Last updated 1 day ago
Apr 1 2008 | 2:47pm ET
One hedge fund honcho thinks investors need not invest in hedge funds to get hedge-like returns. Jerome Abernathy, the former research director at Moore Capital Management, is currently marketing the Stonebrook Alternative Beta Fund, which he says can achieve alpha without the risks and fees associated with hedge funds.
Abernathy said the $54 million fund, which attempts to deliver hedge fund-like returns by periodically rebalancing a portfolio of simple instruments like the Standard & Poor’s 500 and Russell 2000 indicies, and treasury bonds, tends to out-perform during periods of liquidity crises and under-performs during periods of very strong returns for hedge funds in general.
So how did the fund, which launched in May, do during last year’s subprime crisis and January’s global equity crisis? The unlevered version finished its first six months up 9.6%, though it is down 2.85% through February, identical to the HFRI FoF Composite Index’s decline.
While Abernathy concedes that hedge funds and funds of hedge funds do generate alpha on a gross basis, he countered that the alpha is more than offset by the high fees so, on a net basis, they don't deliver any alpha to investors.
“The fund offers weekly liquidity (notice on Monday, money wired out on Friday), no headline risk, and superior tax treatment,” claimed Abernathy.
The fund charges a 1.5% management fee and has a $500,000 minimum investment requirement.
“We think alternative beta will change the way investors view hedge funds and measure their performance,” said Abernathy. “In the same way beta was separated from alpha with the advent of equity index funds, we will see the same separation in hedge funds. It is a natural evolution.”
Next up for Abernathy? A mutual fund platform to be launched sometime in June.
Oct 21 2015 | 10:41am ET
One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…