Hedge Fund Critique

Hedge Nordic reports: Knut Kjær, executive director of Norges BankInvestment Management, the manager of Norway's 1.5 trillion NOK (182billion Euro) state pension fund Norwegian Pension Fund, believes thatmany hedge funds are overpriced beta suppliers.Kjær delivered his opinions at a recent address to the NorwegianPolytechnic Society. To the audience, Kjær said: "Unfortunately, mostmanagement products are delivered as an unclear mix of beta and alphaexposures. Even in the hedge fund industry, which has expanded sharplyover the past ten years, many of the products are more like disguisedbeta exposures than pure alpha exposures. Customers pay anunnecessarily high price for a product that they could easily havemanaged themselves or bought as an index product."He added that the same could be said of many equity funds, moneymarket and bond funds. Kjær informed his audience that the fund iscurrently on a search for investment talent, meaning alpha generation,on both internal and external levels.