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The traditional hedge fund model is no longer working. Performance is poor. Costs are high. Alignment is low. It needs to change. The three forces driving this need for change are:Increasing costs as regulators and investors demand higher operational standardsPressure on fees as investors are become more sophisticated and expect more for lessGreater competition making the markets more efficient and fragmenting available alph.

In my last post, I discussed the importance of the financial industry for everyone from individual investors to nation-states. It plays a critical role in allocating risk and capital which enables economic growth. I suggested that the mechanism for effective allocation is the fair pricing of securities and that active fund managers are the main agents to make this work. Active managers create value by helping to keep prices fair thereby supporting efficient allocation of risk and capital.

By Klaus Wille(Bloomberg) — Scott Treloar, a former Deutsche Bank AG quant specialist, has started his own hedge fund that allocates money to traders around the world.Noviscient Pte aims to have $40 million of assets by the end of this year and $250 million by December 2019, Treloar said in an interview. He’s targeting returns of 10 percent to 15 percent a year — more than double the average hedge fund return of the past 10 years of 4.6 percent, according to data provider Eurekahedge Pte. The fund will charge a 36 percent performance fee, but won’t levy management charges.Rather than employ portfolio managers in his Singapore office, Treloar allocates funds to strategies provided by traders based around the world. A commodity futures trader with a doctorate in machine learning is based in Australia, while another is working from the U.S. and focuses on systematic volatility trading of ETFs.