All About Alpha – You’d be excused if you felt confused about recent changes to the prime brokerage, custody and fund administration business. Goldman Sachs is working with BNY Mellon; Deutsche Bank has a new platform; Merrill Lynch heralds changes to collateral management at industry conferences etc.. In the post-Lehman world, has “boring” simply become hip, or is there really change afoot? To understand these changes, you have to back in time, way back.
Our story starts with the birth of hedge funds themselves. Alfred W. Jones had the groundbreaking idea to start a fund that was long and short securities (and charging a performance fee) such that returns and risk might be optimized. However, short-selling was easier said than done.
