Alternative Portfolio Strategies: Standing in the Alpha-Beta Parking Lot
| Nov 12th, 2006 | Filed under: Portable Alpha & Alpha/Beta Separation | By: Alpha Male |
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By: Matthew Nelson, Tower Group
Published: November 2005
(editor’s note: At AllAboutAlpha, we do all we can to ensure readers don’t get stuck having to subscribe to or purchase the content to which we link. Whenever possible, we find free registrations or provide a free alternative versions of any for-fee content that we cover. However, we make an exception for this report from technology consultant Tower Group (MSRP: US$1750). Regular readers have covered most of the investing themes in the report already. But the report’s IT implications provide a different, more operational, perspective on portable alpha that we think is useful. We briefly summarize these issues below).
But to begin, Nelson sets the table well:
“There’s a significant shift under way that is transforming the very nature of the investment management business…(Investors) are analyzing the data more carefully in an effort to separate the influence of the market from the value added by the manager. This practice has resulted in the explosion in size of pure index portfolios and managers like Barclays Global Investors and State Street Global Advisors, which have seen their assets under management (AUM) soar. Alongside this growth in index assets a groundswell has occurred in the use of alternative portfolio strategies and the notion has arisen that traditional, long-only portfolio mandates are becoming obsolete and that alternative portfolio strategies are the wave of the future.”
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