The Lyster Watson True Alpha examines over 3,000 hedge funds to calculate a positive or negative ranking number for funds that outperform or underperform their strategy. This system attempts to capture each fund’s risk-return tradeoff in order to identify superior managers, according to a press release from the company.
The product balances the incremental risk and the incremental returns that a manager generates, according to the company. It is meant for institutional hedge fund allocators to use when determining the past performance of funds relative to their peers, the company said.
“When applied to hedge funds, Lyster Watson True Alpha helps answer the core question: How do we identify hedge fund managers who take advantage of opportunities when they arise and who protect capital when opportunities are limited?,” said Marc Freed, managing director at Lyster Watson and developer of the system.
Lyster Watson ( www.lysterwatson.com ) is a Registered Investment Advisor, and oversees $1.3 billion in hedge fund assets.
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