Richard Craib (@richardcraib): I tried to get a VC friend to give me a QQQ benchmark on his fund. Let’s just say I didn’t get the allocation 😂.

I tried to get a VC friend to give me a QQQ benchmark on his fund. Let’s just say I didn’t get the allocation 😂. But the bar vs publics gets even higher if you consider the existence of quant hedge funds. If you invested in a market and factor neutral quant fund with 10% net return (above cash) on 10% volatility and blended it with QQQ portable alpha style, your 10 year growth was: $1 → ~$14 vs $1 → $6 in QQQ 30% return vs 20%. This is why uncorrelated alpha is valuable. Not because it’s high return, but because its return geometry lets it stack onto any portfolio without it. Try the same trick with a beta and factor exposed ‘hedge’ fund, and you have a portfolio in extra distress in 2022 (>-50%!). Because you have drawdowns stacking instead of returns! You can think of a fund that tilts into factor bets as making a mess of your return geometry by taking risk on things your already own. For example, your portfolio doesn’t need a hedge fund to tilt you into a bet on AI. The S&P is ~48% an AI bet (so far). By betting on AI beta, the hedge fund “unhedges” to earn returns you own already and sends you a bill for fees. So when you hear a quant hedge fund with 10% net excess return on 10% vol for 10 years with no factor or market exposure, don’t think “wow you lost to QQQ — think wow you beat *anything* by 10% per year, including QQQ, and you’d be a 99th percentile VC too 🤯”. Uncorrelated alpha. Don’t forget this is the whole point.