Beyond replication, HCM harvests the alpha in the algos

Mon Mar 5, 2012

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FRM alumni explore algorithms to offer institutional investors a cheaper option


By Claire Makin

Edward Wethered
Guy Hurley
For HCM co-founder Guy Hurley, algorithms can be beautiful things, able to capture complex trading opportunities in ways that were undreamt of a decade ago. They are also proliferating at incredible speed, and may be about to change the alternative investment landscape in the same way that index tracking transformed traditional investing in the 1990s.

Hurley and the small team at London-based advisory boutique HCM aim to be at the leading edge of this trend. They oversee a diversified portfolio of up to 35 liquid, algorithm-based trading strategies, which are sold in index form by big investment banks. The concept is similar to a multi-strategy fund of traders, but instead of underlying traders, HCM focuses on the new 'alternative beta' indices and the trading algorithms that drive their returns.

"What it means is that we are able to create just about any risk return...

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