Alternative beta strategies and hedge fund replication - Lars Jaeger

There s a buzzword that has quickly captured the imagination ofproduct providers and investors alike: "hedge fund replication". Inthe broadest sense, replicating hedge fund strategies meansreplicating their return sources and corresponding risk exposures.However, there still lacks a coherent picture on what hedge fundreplication means in practice, what its premises are, how todistinguish di erent approaches, and where this can lead us to.

Serving as a handbook for replicating the returns of hedge fundsat considerably lower cost, Alternative Beta Strategies andHedge Fund Replication provides a unique focus on replication,explaining along the way the return sources of hedge funds, andtheir systematic risks, that make replication possible. It explainsthe background to the new discussion on hedge fund replication andhow to derive the returns of many hedge fund strategies at muchlower cost, it differentiates the various underlying approaches andexplains how hedge fund replication can improve your own investmentprocess into hedge funds.

Written by the well known Hedge Fund expert and author LarsJaeger, the book is divided into three sections: Hedge FundBackground, Return Sources, and Replication Techniques. Section oneprovides a short course in what hedge funds actually are and howthey operate, arming the reader with the background knowledgerequired for the rest of the book. Section two illuminates thesources from which hedge funds derive their returns and shows thatthe majority of hedge fund returns derive from systematic riskexposure rather than manager "Alpha". Section three presentsvarious approaches to replicating hedge fund returns by presentingthe first and second generation of hedge fund replication products,points out the pitfalls and strengths of the various approaches andillustrates the mathematical concepts that underlie them.

With hedge fund replication going mainstream, this book providesclear guidance on the topic to maximise returns.