BRI Partners, which this week unveiled an investable index tracking the performance of long/short equity funds, has at least seven more products in the works covering market-neutral, trend-following, mean-reversion and other hedge fund strategies.
The Chicago firm, led by Adam Brass, is designing the indexes to mirror only the beta, or market risk, portions of hedge fund portfolios. Part of the pitch is that many investors are paying high fees but getting little in the way of alpha profits in excess of the market return. BRI, in partnership with Wilshire, is offering similar exposure at a fraction of the cost. And investors also can use the indexes to benchmark their hedge fund returns.
“We believe the timing of what we’re doing seems to meet the appetite of hedge fund investors and allocators today,” Brass said.
BRI, which formed in 2001 to make seed investments in hedge funds, launched the new business line with its BRI Long/Short Index.
Soon to come are the BRI Dynamic Value/Growth Index,
BRI Equity Market Neutral, BRI Long/Short SmallCap Index,
BRI Quality SmallCap Index, BRI Diversified Trend Index,
BRI Diversified Carry Index and BRI Mean Reversion Index.
More are in the pipeline.
BRI is relying on Wilshire to construct portfolios of stocks, currencies, bonds and derivatives that replicate the beta exposures of each of the strategies. For the BRI Long/Short Index, for example, Wilshire is investing in a diverse basket of individual stocks while buying futures on a broad-based equity index to reproduce short-selling activity.
BRI’s main competition in the field of investable fund indexes is Hedge Fund Research, whose HFRX series deploys capital to hedge funds.
Prior to founding BRI, Brass worked at Chicago hedge fund shop Lotsoff Capital.