Franklin Templeton-owned fund-of-funds firm K2 Advisors, founded by managing director William (Doug) Douglass III and CEO David Saunders with $6 million in 1994, is an industry leader in risk management and quantitative analytics. Since 2002, the Stamford, Connecticut–based firm has insisted underlying hedge fund managers provide data on their holdings and now collects thousands of data points each month relating to, among other things, their holdings and debt-to-capital ratio. K2 Advisors then uses its own portfolio construction software to analyze the data and to make investment decisions. Investors benefit from greater transparency through a regular report outlining average monthly returns, position by asset class, stress tests, changes to the portfolio and annualized standard deviation, among other factors…