Remembering Alex Porter and “Hedged” Funds

Alex Porter, who worked at the first hedge fund, A. W. Jones & Co., and later ran his own successful firm, died April 18.

As one of “the last practitioners from the A.W. Jones era,” Porter carried the long-ago notion of a “hedged” fund as one that is “long and short and thereby inured to the vicissitudes of the overall market,” said James Grant, a friend and colleague who publishes Grant’s Interest Rate Observer. 

Today, by contrast, the term “hedge” suggests “leveraged and long” investing, he said, which often amplifies rather than cushions market swings.

For Porter, less volatility didn't mean lesser performance. From 1976 until 1993, his first fund reportedly generated a net compound annual return of about 20 percent .