Billion Dollar Club

Performance: how the returns stack up so far


Why tracking errors inevitably creep into the equation

Another reason why the broader emergence of absolute return strategies may have been a disappointment to some investors has been their overall performance over the past year or so, at a number of levels. One of these is that even for those hedge funds that aim to replicate as closely as possible offshore strategies with proven track records, there will inevitably be an element of tracking error, making it virtually impossible for the performance of the UCITS-compliant product to provide a mirror-image of the Cayman strategy.

One example of a hedge fund manager that has successfully replicated a