Passive investing gets active

Gaining exposure to the hedge fund industry through investable indexes is one of the growth areas in alternative investment. David Walker and John Butcher examine how the index providers are looking to capitalise on the money flowing into the indexes and related products

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From a standing start in 2002, investable hedge fund indexes’ assets under management have grown to more than $11 billion by July 2004, an achievement putting many actively managed funds of hedge funds to shame.

The indexes, comprised of underlying hedge funds, are currently offered by six providers – MSCI, HFR, Standard & Poor’s (S&P), Credit Suisse First Boston/Tremont Index, FTSE and Dow Jones.

Investors can access the indexes either directly, or via products such as structured notes

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