Product Description
Invaluable insight into measuring the performance of today’s hedge fund manager
More and more institutional funds and high-net-worth assets are finding their way to hedge funds. This book provides the quantitative and qualitative measures and analysis that investment managers, investment advisors, and fund of fund managers need to allocate and monitor their client’s assets properly. It addresses important topics such as Modern Portfolio Theory (MPT) and Post Modern Portfolio Theory (PMPT), choosing managers, watching performance, and researching alternate asset classes. Author Edward Stavetski also includes an appendix showing detailed case studies of hedge funds, and gives readers a road map to … More >> Managing Hedge Fund Managers: Quantitative and Qualitative Performance Measures
Managing Hedge Fund Managers: Quantitative and Qualitative Performance Measures (Wiley Finance) is a book that tries to structure a due diligence process for a smaller fund of funds, a do it yourself guide to hedge fund due diligence. It is good read, well written, but after having gone through, there are few insights one walks away with.
Most of the advices inside the book are related to, at least what I think, best practice for hedge fund due diligence and are thus fairly generic. There is no specific domain knowledge, strategy description or insight into different questions one may want to ask oneself. The scoring method used by the manager, is a fairly standard approach, at best leaving you with a structured approach to attacking the mass of possible hedge fund allocations out there.
There is a chapter on quantitative measures for ranking hedge fund, but it unfortunately probably the weakest part of the book. Fairly generic, an Internet search would have left you with the same knowledge. The qualitative information inside is of higher quality. Rating: 3 / 5
Maybe it’s a pity that Stavetski didn’t come out with this book a year or two ago, when the market was much higher. The advice proferred is quite good. Many tips are given on how to assess a hedge fund. You get to understand how to compare the fund’s historical performance against that of other funds and asset classes. The most important aspect is how to distinguish the fund’s alpha and beta. You are only paying [or rather probably overpaying] for alpha. So if you find that your fund is turning into a closet beta tracker, it’s time to dump it, since index funds are much cheaper for the same objective of following beta.
The book just came out this year, 2009. Now there are inevitable lags in publishing, between when the author makes the last changes to the text and when the book rolls off the printing press. In this case, the delay seems to have been a year. For example, Table 5.3 about the Case-Shiller home price index has the last entry being Q1 2008, a full year ago. Rating: 4 / 5