With the major league baseball season getting under way in the US, Alpha Male’s 5 year old son has quickly become enamored with the daily league standings. Well here’s a league table that he won’t find in our local paper. Pensions & Investments reports today that institutional money managers now manage, you guessed it, $30 billion in 130/30 “or similar equity strategies” ($29.9 billion to be precise). And for those scoring the game at home, P&I also has a great listing of who exactly is offering what in the burgeoning world of “1X0/X0”.
P&I’s Jay Cooper reports that State Street, BGI, and Jacobs Levy have the early lead, but that “no firm has established itself as king of the mountain yet”. Other analysts polled for the story pegged the number at up to $60 billion when you include capital “allocated but not yet invested”.
Apparently, it hasn’t been too tough convincing asset managers to offer “short extension” strategies – the fees are higher. According to P&I, fees for 130/30 range between 60 and 100 bps vs. 50-80 for a typical US active large cap strategy. (Manager database provider eVestment Alliance also keeps a list of institutional manager fees across a whole whack of strategies for easy comparison).
But frankly, that’s not a huge gap when you consider that 130/30 strategies deliver a lot more “active” management per dollar invested. In other words, the fee for each unit of active management (ostensibly what an investor is paying for) actually seems to be much lower for 130/30 strategies.
Several institutions are cited by P&I as leading by example – including the storied California Public Employees Retirement System (CalPERS), which has assembled a short list that includes one of the original 1X0/X0 providers, Analytic Investors (see posting below).
Sure, it lacks the excitement of baseball, but these players are making a lot more than those relatively impoverished baseball stars.