Hedge fund replication

Nice article in The New Yorker  on Harry Kat and hedge fund replication. Why pay high management fees if software can replicate what hedge fund managers do?

Not so long ago, Kat recalled, one hedge-fund manager, a “global macro” investor who specializes in betting on currencies and stock markets around the world, approached him with an offer. “He said, ‘Harry, I want to buy your thing so I can replicate myself. Then I’ll be able to enjoy life a bit more and keep sending my clients bills for two plus twenty. It’ll take them years to figure it out, if they ever do.’ ”

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2 thoughts on “Hedge fund replication

  1. Well the comment above doesn’t make much sense to me but it is true that there are some hedge fund replication models out there. The important to thing to understand is that most legimiate hedge fund replicators are models that take similar risks to what hedge fund managers might take or are taking, they don’t actually invest alongside the hedge fund managers, this is a little known or understood difference.

    – Richard
    Hedge Fund Managers
    http://richard-wilson.blogspot.com/2007/10/hedge-fund-managers-pedigree.html

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