Lyster Watson Receives Patent for True Alpha® -- Unique Rating and Ranking System for Hedge Funds

Generates Proprietary Hedge Fund Indices and Performance Replication Solutions

Jun 01, 2010, 11:32 ET from Lyster Watson & Company

NEW YORK, June 1 /PRNewswire/ -- Lyster Watson & Company, a hedge fund advisory firm that manages more than $1 billion in assets, is pleased to announce that it has received US patent protection on its True Alpha® hedge fund rating and ranking system. The US Patent Office awarded the firm and portfolio manager Marc Freed US Patent No. 7,707,092 on April 27.

First created in 2003, the now patented methodology identifies superior hedge fund managers based on a fund's True Alpha® score, which compares its returns and volatility to its peer group. Resulting rankings allow Lyster Watson's portfolio management team to distinguish those managers who have demonstrated skill to generate above-average returns with less volatility.

"This patent is recognition of many years of hard work and highlights just how innovative our approach to identifying manager skill is," said Robert Watson, Chief Investment Officer and cofounder of Lyster Watson. "The True Alpha® rating and ranking system provides insight into hedge fund performance in a way that enables us to develop customized solutions for investors seeking absolute returns in a liquid and transparent format."

In developing this patented technology, the firm has created a diverse selection of more than 20 hedge fund indices cross-referenced by strategy and geography. The indices form the basis for the True Alpha® Trend Trackers, a set of investable strategies designed to track the performance of these proprietary indices that reflect the strategy-level performance of thousands of hedge funds. With data culled from over 6,000 funds, some with records spanning over 25 years, these discrete classifications have enabled Lyster Watson to identify the risk factors that drive the performance of different strategies with a degree of precision not available from broader indices.

Unlike other hedge fund replication products that try to expose investors to aggregate hedge fund performance, True Alpha® Trend Trackers identify the drivers of returns of strategy-specific indices. True Alpha® Trend Trackers use liquid instruments such as ETFs, listed futures contracts, government bonds, and money market assets that mitigate liquidity, fraud, and manager risks.

"Better indices result in better replication products. Our tracking solution has the ability to offer the absolute return characteristics of hedge funds with transparency and mutual fund-type liquidity," said Marc Freed, Managing Director.

Founded in 1992, New York-based Lyster Watson & Company is a SEC-Registered Investment Advisor that manages more than $1 billion in assets. The firm offers a multi-faceted alternative investment platform to its clients, including fund-of-hedge-funds strategies and customized investment programs. The firm uses disciplined, process-driven criteria together with nearly two decades of experience constructing portfolios that match the liquidity and risk-reward expectations of its clients. This includes Lyster Watson's True Alpha®, a patented ranking system that incorporates fund risk and return to distinguish superior managers. Please see to learn more.


The company name is a trademark and True Alpha® (US Patent No. 7,707,092) is a patented registered trademark of Lyster Watson & Company and Marc S. Freed. Information provided herein is accurate at the time of publication and is subject to change without advance notice. This press release is not an offering or a solicitation of an offer to purchase any product or service of Lyster Watson & Company. The use of Lyster Watson True Alpha® does not guarantee any specific returns or performance and may result in losses.

SOURCE Lyster Watson & Company