Former Goldman Sachs Group Inc star hedge fund manager Mark Carhart, who departed in 2009 after the Global Alpha fund he co-managed had struggled, will be starting his own company. He is trying to raise $1 billion for a new investment fund.
Mark Carhart said he plans to start in 2010 and is targeting large institutional investors. Ultimately, he plans that the unnamed firm will manage $5 billion in the computer-driven investment strategies which offer new twists in a field of thousands of funds.
The goal is to generate “alpha,” the measurement of a manager’s skill in doing better than U.S. stock returns, he said, without riding the same ups and downs as the market, which is called “beta.”
Unlike normal funds, Carhart said his new fund will identify opportunities to collect risk premiums, in stead of market inefficiencies, with different returns than stocks.
“It’s meant to replace a large proportion of hedge funds which don’t have enough alpha but have too much embedded beta,” Carhart said in the interview. ‘It’s actually a new category: some call alternative beta, but “exotic beta” is a better description.’