Deutsche Bank’s new index replicates hedge fund beta

Deutsche Bank has become the latest investment bank to launch an index that tracks hedge fund beta. The db Absolute Return âeta Index (dbARâ) does not invest in any hedge funds or fund of funds, but replicates the performance of fund of hedge funds through a proprietary algorithm that calculates the appropriate asset weighting, long or short, across a number of liquid asset classes.

Deutsche Bank says the dbARâ Index outperforms other beta replication indexes and other investable fund indexes because it replicates the return of hedge funds before fees.

The index only replicates fund of hedge fund indexes rather than single manager indexes. The dbARâ index can be accessed via a variety of products which include Ucits III funds, certificates, and principal protected notes and leveraged structured notes.

Both Merrill Lynch and Goldman Sachs have launched their own versions of