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The development of higher performance target funds is a reaction to a number of developments in the ...

The development of higher performance target funds is a reaction to a number of developments in the fund management industry. These include competition from hedge funds, recognition of the need to price alpha and beta differently, and an attempt to increase margins in an industry where cost control has been problematic. But however rational it might be, the arrival of these new funds is not necessarily a win for investors. At the heart of the issue is the question of whether there is sufficient alpha available to meet the promise. To generate alpha a fund manager has to be able to find i...