Bypassing The Black Box: A Systematic, Transparent Way to Access A New Risk Premium
Hedge funds are facing a “war on two fronts”. First, a superannuation fund investing in a hedge fund portfolio over the past two and a half decades would have been better off, net of fees and taxes, investing in a passive global equity portfolio.1 Second, the traditional opaque “black box” which characterises many hedge fund models sits uneasily with superannuation funds’ increasing appetite for transparency in their investment arrangements. Quite simply, best practice fiduciaries are empowered by portfolios which have systematic, transparent strategies rather than black boxes.
1 See for example “Hedge funds rebound from worst ever start to year”, Australian Financial Review, 11 August 2016, available at www.afr.com.