IN THE PAST year, several investment banks have launched products that purport to give investors hedge fund-type performance without the need to actually invest in hedge funds themselves. Known variously as hedge fund replication strategies, hedge fund clones or alternative beta products, the strategies offer what sounds like the ideal alternative investment.
By simply buying a structured note from an investment bank, investors can, so the marketing goes, get exposure to the risks and rewards of hedge fund investing while avoiding the usual negatives of high fees, a lack of transparency, lock-in periods and capacity constraints.
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