Portable Alpha via Structured Products
| Nov 21st, 2006 | Filed under: Portable Alpha & Alpha/Beta Separation | By: Alpha Male |
|
Portable Alpha – The Most-Talked-About Application of ‘Alpha’ is Becoming Reality
By: Todd M. Brussel, The Royal Bank of Scotland Group
Published: November 2006, Eurekahedge
This article provides some good simple examples of how alpha can be distilled, ported and packaged in the form of structured products.
“a synthesised structured portable alpha product employing FOF [funds of funds] can transform liquid, long-only investment exposure from one with a high probability of negative tracking error to one with a significant probability (to AA or AAA certainty) of meaningful outperformance.”
Read Full Article (free registration required)
Editor’s Note: The awkward title to this story “Portable Alpha: The Most Talked-About Application of ‘Alpha’…” suggests that we really do need a new term. ”Alpha” is not a new methodology or process. It cannot be “applied”. It is, and has always been, the raison d-etre for active management. Here at AllAboutAlpha, we will continue to beat the “alpha-centric” drum – as in, “Portable Alpha: The Most Talked-About Form of Alpha-Centric Investing…”.
