Credit Suisse has formed a research partnership between its Beta Strategies group and William Fung, David Hsieh and Narayan Naik, academic leaders in the areas of hedge fund and alternative beta research.
The Beta Strategies group is Credit Suisses fiduciary quantitative index platform and is part of Funds and Alternative Solutions within Asset Management.
Fung, Hsieh and Naik are widely-recognised as pioneers in researching the fields of alternative beta and hedge fund replication, having explored these topics from an academic perspective since 1994.
Fung serves on the boards of financial services companies and holds the position of visiting research professor of Finance at the BNP Paribas Hedge Fund Centre, London Business School. Hsieh is Bank of America professor of Finance at the Fuqua School of Business, Duke University. Naik is professor of Finance and director of the BNP Paribas Hedge Fund Centre at the London Business School.
In this partnership, Credit Suisse and Fung, Hsieh and Naik will focus on the research in support of ongoing development of alternative beta models designed to replicate the risk and return characteristics of hedge fund strategies and identification of alternative risk premiums. These new alternative beta models will further enhance Credit Suisses quantitative replication platform capabilities.
Because such strategies will be executed through liquid securities such as futures, options and ETFs, access to the risk and return profile of hedge fund strategies may be achieved with full transparency and high levels of liquidity.
“Our group has a longstanding tradition of providing clients with thought leadership and innovative investment solutions. Clients are seeking transparent investment methodology, increased liquidity and costs in line with existing alpha and beta products,” says Steve Smith, head of Credit Suisses Funds and Alternative Solutions business.
“Institutional investors demand a detailed understanding of the return sources in their portfolios and are willing to substitute alternative beta factors through cost-effective replication strategies. This new investment approach may ultimately allow investors to tactically adjust their portfolios to lower the expense ratio, enhance liquidity, hedge long positions and obtain a desired correlation,” says Oliver Schupp, head of Beta Strategies.
“Credit Suisse has been a leading provider of hedge fund benchmarks for many years. They have tremendous insight into the underlying factors that drive a broad array of hedge fund strategies performance. The firms experience in managing quantitative hedge fund portfolios makes Credit Suisse an ideal partner to take the concept to the next level,” adds Fung.