Leveraged alpha

Lingo update Go Premium The JC keeps you bang up to date with the best in class. Click ᐅ to expand: Buzzword Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

Snake oil, basically.

Leveraging alpha is technically possible, but in practice --- yeah.

What most 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 “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.

Go hunting for charlatans here.