Attack of the Hedge Fund Clones

From Bloomberg: In the investment world there are two kinds of people -- those who want to beat the market, and those who want to be the market. Hedge fund managers are the former, while index fund managers are the latter. But what happens when an indexer wants to track the hedge fund market? You end up with funds bearing wonky, impenetrable-sounding names like the AdvisorShares QAM Equity Hedge (QEH) and AlphaClone Alternative Alpha (ALFA).

To get a feel for how this works, imagine that on a day when most global stock markets are flat, Mexico announces better-than-expected growth in gross domestic product and the iShares MSCI Mexico ETF (EWW) rises 3 percent. If a hedge fund is also up 3 percent that day, it's likely that it, too, has exposure to Mexico, and that by investing in the Mexico ETF you can capture the broad essence of that exposure.

Voldeng and Beleznay don't just analyze performance numbers. The HFRI index is broken down into specific subcategories of hedge funds, such as long/short technology, which enables them to get a sense of where the funds are normally invested..

Is trying to create a hedge fund index worth it…...

Wait...wait...there's more at http://www.bloomberg.com/news/2013-06-03/attack-of-the-hedge-fund-clones.html