neutral. It is often hard, if not impossible, to disentangle what is alpha and what is beta. For a long time, nobody cared because most of the investors in the hedge funds were high-net-worth individuals who had their eyes on the absolute returns, not abstract geeks. Today, the situation has changed dramatically. Equity market neutral managers (mostly quants) manage zero-beta funds with refined risk management systems, and often deliver pure alpha. Institutional investors are increasingly pursuing and paying handsomly for alpha, but are unwilling to pay excessively for beta management. Hence,
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