Investable indices

Wed May 21, 2008



The advantages of a passive approach

Philippe Schenk, director in Credit Suisse Alternative Investments, discusses the merits of passive rules-based hedge fund investing

Hedge fund investing has traditionally been an area reserved for high-net-worth individuals who had experience in choosing appropriate hedge funds for their portfolios. Early investors needed to carefully research managers they invested with and were challenged by the lack of transparency and means of comparison. The emergence of fund of hedge funds managers allowed some investors to delegate the research and selection process to a professional third party, which typically charges a management and performance fee for their advice.

The challenge, however, of selecting the right fund of funds manager still remains. Gaining access to hedge fund returns has become even easier today through the advent of hedge fund indices and index-linked products. Investors can now access hedge funds through a simple transaction into an index that...

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