NEW YORK (HedgeWorld.com)–PrivateRaise LLC, the company that operates the equity-placements web site PrivateRaise.com, announced that it will expand the site’s coverage to include the hedge fund marketplace.
PrivateRaise.com will provide easy-to-use tools and performance metrics, according to the company’s announcement, and will make available a white paper that seeks to clarify the relationship between hedge fund returns and interest rates.
This white paper contends that too many analysts measure alpha simply by subtracting the risk-free interest rate from the fund return. More accurate results are obtained, it argues, by measuring fund returns as a multiple of the risk-free rate. This creates what it calls the excess return ratio. This statistic, the ERR, also can be used to measure the standard deviation of the data points, on a rolling 12-month basis, producing the ERR deviation.
“We believe the ERR deviation produces a more accurate picture of a fund’s return consistency by removing that portion of the volatility of a fund’s returns attributable to movements in the risk-free rate,” the paper states.
According to E. Kurt Kim, chief executive of PrivateRaise LLC, as quoted in the company’s announcement of its expanded web site, the firm’s goal is to be a primary source for quantitative hedge fund risk and return information and analytics. “Despite recent dramatic growth in the hedge fund community, we believe this industry remains in its infancy. The pace and consistency of such growth will depend, in part, upon greater informational efficiency to which we plan to be a positive contributor.”
Mr. Kim also said that he believes that industry will come to appreciate the “strength and simplicity of our perspective.”
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