Goldman Sachs' Hedge Fund Clone

Goldman Sachs, one of the most prestigious investment banks in the financial industry, is setting up a hedge fund replication tool (or hedge fund 'cloning' tool) -- which it calls the Absolute Return Tracker index (ART) -- that may usher in a new era of even greater competition in the hedge fund industry. You can read about it in today's Financial Times.

This announcement is closely tied to a previous blog posting I did -- The Econophysics Blog: Hedge Funds & Minding One's Pennies -- about how finance academics at MIT and other schools are attempting to create an intellectual foundation for replicating the performance characteristics of hedge funds at lower costs and using more accessible financial instruments.