From All About Alpha, some great posts on whether hedge fund alpha can be replicated with quantitative, low-cost models: Below are three sample entries, but All About Alpha has pounded this topic with about 10 entries the last couple of days.
State Street MD on hedge replication model: “I was shocked the explanatory power was so highâ€
Will hedge funds regress towards index-like products?
Kat: Why Accurately Replicated Hedge Fund Indices Won’t Do You Much Good
Those who know me can take a good guess about whether I believe the 8,000 hedge fund managers who are now in the field are, in meaningful numbers, generating idiosyncratic alpha. And if they are not, then their fee/performance model is all wrong....