Leveraged alpha: Difference between revisions
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What most {{tag|hedge fund}} manager claim to be [[leveraged alpha]] is, usually, really plain old [[vega]] - that is, just [[leverage]]. If your market benchmark is beating the risk-free borrowing rate, you ''will'' make money by borrowing. But if it ain’t... | What most {{tag|hedge fund}} manager claim to be [[leveraged alpha]] is, usually, really plain old [[vega]] - that is, just [[leverage]]. If your market benchmark is beating the risk-free borrowing rate, you ''will'' make money by borrowing. But if it ain’t... | ||
A fellow who pitches a | A fellow who pitches a “[[leveraged alpha]]" product to you is most likely a charlatan — you would expect that, it being the financial markets and all — and a mediocre [[fund manager]]. Especially if you see [[backtesting]] to demonstrate ''historical'' [[alpha]]. | ||
{{c|Greeks}} | {{c|Greeks}} | ||