Hedge Fund Replication
There are currently two main approaches to replicate the return profile of hedge funds based on the idea of Alternative Betas:
- directly extracting the risk premia (bottom up), an approach developed and advocated by Lars Jaeger
- the factor-based approach based on Sharpe's factor models and developed for hedge funds first by professors Bill Fung (London Business School), David Hsieh (Fuqua School of Business, Duke University) et al.
Read more about this topic: Alternative Beta
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