Links and a Long Short ETN Launch

Is anyone going to Andrew Lo’s presentation at the CFA Society here in Los Angeles next week?  If so come say hello.


Betting on the Blind Side


kaChing is requiring all Geniuses on their platform to register as RIAs – which I think is a great step in the right direction.  I still think the killer app for these guys is to morph into a technology/back office provider to outsource RIA duties which I posted about back in October.

But that also only makes sense for RIAs once kaChing has some decent AUM (and by decent I mean > $100mm).  Somewhat of a chicken/egg problem, but I like the direction they are moving.  Would also like to see them drop the silly “Genius” label.  Anyone willing to call themselves a genius in our field needs to go read my last blog post on the Folly of Forecasting and the must read Montier behavioral PDF the Seven Sins of Fund Management.


This could be interesting but my first reaction is blah.   (CSLS Fact Sheet here, Index Fact Sheet here, Brochure here ).  If you recall from my book and numerous postings, these indexes are notorious about overstating returns vs. their liquid and investable versions (usually on the order of around 4% a year).

So for this fund you get:  no underlying hedge funds (rather a factor based replicator, but you want the ALPHA in hedge funds NOT the BETA), the credit risk of an ETN, possibly overstated hypothetical returns vs. the non-investable version, and active management fees – all for something that doesn’t really add anything to a diversified portfolio anyways.  I would much rather see an ETN on the actual foreign listed hedge funds with a bias towards those with the biggest discount to NAV.

Credit Suisse recently announced that for the first time, U.S. investors will be able to access the Credit Suisse/Tremont Long/Short Equity Hedge Fund Index strategy through an exchange-traded product.

The new Credit Suisse Long/Short Liquid Index (Net) ETN (NYSE Arca: CSLS) (the “CSLS ETN”) is designed to provide a more liquid alternative to hedge fund investing with lower fees. The Credit Suisse Long/Short Liquid Index (Net) seeks to replicate the performance of the Credit Suisse/Tremont Long/Short Equity Hedge Fund Index by tracking the performance of non-hedge fund, transparent market measures.

The CSLS ETN is designed to provide lower volatility than traditional asset classes with equity-linked returns. Plus, the CSLS ETN gives investors the freedom to buy and sell openly on an exchange. By providing real-time pricing, intraday liquidity and portfolio transparency, the CSLS ETN represents the next generation of alternative investing.