Description: Hedge funds occupy an important role in the financial system. They are among the mechanisms that provide price discovery, for example. The price discovery function means that some investors have the potential to receive an incremental return from hedge funds.
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HEDGE FUNDS Hedge funds occupy an important role in the financial system. They are among the mechanisms that provide price discovery, for example. The price discovery function means that some investors have the potential to receive an incremental return from hedge funds.
This potential incremental return is, of course, balanced against incremental risk. Understanding and managing the sources of risk in a hedge fund portfolio requires analytic tools that provide greater transparency into skill‐based returns generated by hedge fund managers.
MSCI’s Barra models use a factor structure to enable our clients to forecast risk for equity, fixed income, cash and derivative instruments at both the asset and portfolio level. The industry standard since the 1970s, our models provide broad equity coverage across developed, emerging and frontier markets. Clients use Barra models for risk forecasting, portfolio construction, performance and risk attribution, and as input to alpha generation.