Capital
Misallocation

The
Multiplicative
Indictment

The Causal Barbell: Part 1

How much alpha does your hedge fund need to beat the index? You supply the assumptions. The arithmetic does not negotiate.

Market — feeds every tab

Defaults

These are starting values. Move any slider; the indictment is yours.

  • 10-year hold
  • 1.5-and-20, pod-level netting on, pass-through skipped
  • ½σ² variance drag — conservative if the book is left-tailed
  • Monte Carlo seed 20260910, 10,000 shared draws
  • Cascade impact k = 0.09
  • Shiller real total returns, 1871–2023

Tab 2 · Sensitivity grid

Break-even alpha is 6.0% at your settings

Book vol \ Fee scale0.4×0.6×0.8×1×1.2×1.4×1.6×1.8×2×
4%
3.5
4.2
4.9
5.7
6.5
7.3
8.3
9.3
10.4
6%
3.6
4.3
5.0
5.8
6.6
7.5
8.4
9.5
10.6
8%
3.8
4.4
5.2
6.0
6.8
7.7
8.6
9.7
10.8
10%
3.9
4.7
5.4
6.2
7.0
7.9
8.9
10.0
11.1
12%
4.2
4.9
5.7
6.5
7.3
8.2
9.2
10.3
11.5
14%
4.5
5.2
6.0
6.8
7.7
8.6
9.6
10.7
11.9
16%
4.8
5.5
6.3
7.2
8.1
9.0
10.0
11.2
12.4
20%
5.6
6.4
7.2
8.1
9.0
10.0
11.1
12.3
13.6
24%
6.5
7.4
8.2
9.2
10.2
11.2
12.4
13.7
15.1
Hedge fund wins Within 50 bps Beta winsCells show break-even alpha. Border marks the nearest cell to your Tab 1 book.