Portable Lexicon Alpha Strategies


Hedge funds, which produce abnormal returns by hedging their funds, are the riskiest users of lingual leverage to produce absolute marketing returns. Overleverage by hedge funds of the terms "leverage" "risk" and "hedge fund" along with "absolute returns," has increased total, absolute risk exposure with respect to absolute returns to understanding.

According to NDIS, sponsored by the Strategic Investment Group, the term hedge fund "may have little practical utility in summarizing the investment characteristics of those funds in aggregate." Eight out of 10 respondents either "strongly agreed" or "agreed" that "hedge fund" was "too broad to be useful," with few holding a diverging viewpoint. "Risk" and leverage" did no better, with only 60% even able to define what the latter is, and a similar number regarding portable alpha, saying they were cable of explaining how to implement such a strategy. Fewer than half were able to accurately describe what portable alpha is. NSID says investments professionals are "afloat on a sea of ambiguity," partly because "new investment strategies are viewed through the prism of the traditional investment.

'Hedge Fund' Lexi-can’t Cut It Anymore [DailyII]