Hedge Funds

Risk Premia: Theory vs. Reality

In a recent issue of Hedge Fund Intelligence, Beachhead Capital Management’s Andrew Beer explains why the theory of risk premia investing is complicated in practice.   Click here to register and access the full article, or contact us for additional information

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P&I Article: What every allocator needs to know about hedge fund replication

From guest contributor Andrew Beer: In the current heated debate on hedge funds, there’s no middle ground. You’re either pro or con, in or out, red or blue. But this is, frankly, stupid. Hedge fund proponents make legitimate points about diversification, but fail to acknowledge where they’ve been flat-out wrong on many issues (e.g. wishful thinking that alpha would adequately cover fees). Likewise, the “out” camp is correct that fees are egregious, but offer no credible alternative. Redeem from hedge funds and invest in … bonds with negative yields? Equities at the tail end of the second-longest bull market in …

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This tiny hedge fund has an incredible track record, and outsiders can’t understand how

Andrew Beer provides skeptical comments on hedge fund highlighted in Business Insider that almost never loses money: As for BlackBox, the performance is eye-catching, and it caught the people we asked about it by surprise. “Some of the best minds on Wall Street trade in these markets, and no one has figured out how to make 1,200 [basis points] over LIBOR and never lose money,” says Andrew Beer, managing partner at Beachhead Capital Management, an investment adviser.” Click here to read the full article  

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Low-Fee ETFs Can Be a Form of Alpha, Says Beachhead Capital’s Andrew Beer

In a recent interview with Bloomberg, Andrew Beer shares his view on hedge fund replication and describes in detail how the Equity Hedge Dynamic Beta strategy utilizes a handful of ETFs to give investors exposure to the 40 largest equity hedge fund managers, without the standard 2-and-20 fee structure. Click here to read the full article

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The Hypocrisy That’s Turned Hedge Fund Activists Into Billionaires

By Andrew Beer, guest contributor to Forbes.com Hedge fund activists have attracted hundreds of billions of dollars in investor capital over the past decade with a strategy to bring accountability into corporate boardrooms. Prominent funds have taken on corporate icons ranging from Microsoft and DuPont to eBay and PepsiCo, running campaigns to refocus operations and increase returns of capital to shareholders, or spin and sell businesses entirely. But who is holding the activists accountable? Missing from the debate on hedge fund activists is a discussion how funds treat their own investors. Click here to continue reading the article

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The Trouble with Alpha: Part I

Investors equate “alpha” to outperformance.  A high alpha fund presumably delivers substantial excess returns relative to its benchmark. True alpha is short-hand for manager skill.  Statistically, alpha simply is the result of a linear regression between two return streams. The regression finds the straight line (ordinary least squares) that best fits the time series. Visually, beta is the slope of the line and alpha is where it crosses the vertical axis. The calculation was designed to uncover managers who outperform simply by taking on more risk. A manager who leverages to outperform the S&P in an up year will show …

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Institutional Investor: A Hedge Fund Adviser’s Open Letter to Pension Trustees

Included below is an excerpt of Andrew Beer’s article published on June 20, 2016: It’s hard to pick up a financial newspaper these days without seeing some sort of piece on a purported hedge fund disaster.  There are a number of reasons, I surmise, that this is the case: The “rich guy gets hammered” trope sells papers.  For every fund down 20 percent, a different one is up 20 percent.  There’s a cottage industry of people who run around trying to find the next calamity. High fees − justifiably − lead to high expectations. When you pay 2-and-20, you should …

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Smart Money Insights: Weekly Brief June 20

The Collapse of Visium At its peak, Visium Asset Management oversaw $8BN across five hedge funds and a mutual fund focused largely on the health care sector. The firm recently announced that it is liquidating four of its funds and selling another to AllianceBernstein. The liquidations followed the arrest of a high-profile portfolio manager at Visium for insider trading. Visium’s flagship Balanced Fund was down approximately -9.3% YTD through May and the firm has been hit with a wave of redemptions following the disclosure of the insider trading investigation. Meanwhile, investors will need to wait several months for their capital …

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Financial Times: The Hedge Fund Fee Structure Consumes 80% of Alpha

Investors bear the risks and managers reap the rewards, says Beachhead’s Andrew Beer. The average hedge fund earns 1.67 per cent in management fees and is paid 18 per cent of investment profits annually. Over the past ten years, investors paid away half of pre-fee returns. Even more troubling is the fact that fees consumed 80 per cent of alpha, the active return on an investment. Yes, the industry still generates a lot of alpha, but it goes to the managers, not investors. How did we end up in a world where investors bear the risks and managers reap the …

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Why a ‘Replication’ Strategy Trumps Liquid Alt Funds

Catch Andrew Beer interviewed on TheStreet. The liquid alternatives movement is trying to bring hedge fund strategies to ordinary investors. Unfortunately, performance has been subpar for the majority of liquid alternative funds and the fees are still relatively high compared to the average mutual fund. Andrew Beer, managing partner at Beachhead Capital Management, said a ‘replication strategy’ is the better option. ‘The idea is simple: figure out how hedge funds are invested, and copy it,’ said Beer, who also refers to his replication strategy as ‘Dynamic Beta’. Beer said even for sophisticated investors, it is difficult to figure out exactly …

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