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'Quant' hedge funds headed for worst month since Aug 2007
- Thread starter Dogfish
- Start date
the vast majority of hedge funds are total frauds in that they cannot deliver 'alpha' on a consistent basis.
its a great scheme though..
raise money, play with it, get lucky, get huge bonus and fee, they can never take that away from you, what happens after that doesnt matter. risk to manager? zero.
the end.
its a great scheme though..
raise money, play with it, get lucky, get huge bonus and fee, they can never take that away from you, what happens after that doesnt matter. risk to manager? zero.
the end.
The reason could be such developments like this one (correlation reversal):
http://www.elitetrader.com/vb/showthread.php?s=&threadid=252187
Since they very often use pairs trading then they maybe overlooked such correlation reversals in their auto trading algos....
http://www.elitetrader.com/vb/showthread.php?s=&threadid=252187
Since they very often use pairs trading then they maybe overlooked such correlation reversals in their auto trading algos....
Quote from ChkitOut:
the vast majority of hedge funds are total frauds in that they cannot deliver 'alpha' on a consistent basis.
its a great scheme though..
raise money, play with it, get lucky, get huge bonus and fee, they can never take that away from you, what happens after that doesnt matter. risk to manager? zero.
the end.
Exactly, the real art of the hedge fund is sales. The portfolio (mis)management is a mere sideline.
Quote from Ash1972:
The portfolio (mis)management is a mere sideline.
yep, and in every prospectus you'll find disclaimers that state in more eloquent terms, "we are not sure if you'll do well, we actually have no idea" lol. but do people care? nope. so the show goes on. why not?
yes, there are the 1%ers that actually do deliever year after year after year (rentec) but most are closed to new investors.
this is taken from a goldman sachs prospectus for one of their quant funds..
Management Risk. A strategy used by the Investment Adviser may fail to produce the
intended results. The Investment Adviser attempts to execute a complex strategy for
the Fund using a proprietary quantitative model. Investments selected using this model
may perform differently than expected as a result of the Component Market Factors
used in the models, the weight placed on each Component Market Factor, changes from
the Component Market Factorsâ historical trends, and technical issues in the construction
and implementation of the models (including, for example, data problems and/or
software issues). There is no guarantee that the Investment Adviserâs use of the
quantitative model will result in effective investment decisions for the Fund. Additionally,
commonality of holdings across quantitative money managers may amplify losses
Quote from ChkitOut:
the vast majority of hedge funds are total frauds in that they cannot deliver 'alpha' on a consistent basis.
its a great scheme though..
raise money, play with it, get lucky, get huge bonus and fee, they can never take that away from you, what happens after that doesnt matter. risk to manager? zero.
the end.
+1