Alpha-centric Newsreel

Here is a sample of the news stories we didn’t get a chance to explore in detail this week.  As usual, all of them can be found on the Alpha-ticker above or in the news items section of AllAboutAlpha.com (free registration may be required for a few of these).

Morgan Stanley says Alpha/Beta Separation “the way of the future”. The AllAboutAlpha site partner lays out its alpha-centric philosophy telling IPE that the pension industry is about to experience a “second wave” of LDI strategies based on the separation of alpha and beta.

Dutch Insurer Aegon splits portfolio into alpha and beta segments are farms each one out to a different manager. According to the firm’s press release, “By managing the parts separately from one another, better risk-return ratios are possible. This way, more sources of value added will be available and a greater focus can be created in the portfolio. Separating the US share portfolio has created an increase of a yearly average of the total return of 2.5% without any risk increase.”

Fung, Hsieh and Naik sign-on with Credit Suisse. HedgeWorld reports on the recent Jaeger/Kat debate at AllAboutAlpha.com, saying “Hedge fund replication has recently been the subject of an ongoing debate between Lars Jaeger, head of alternative beta strategies at the Partners Group, an alternative asset manager based in Zürich, Switzerland, with assets of 24.4 billion Swiss francs ($23.9 billion), and Harry Kat, professor of risk management and director of the Alternative Investment Research Centre at London’s Cass Business School.” (further coverage in the Financial Times)

130/30 Roundtable. Global Pensions magazine published the transcript from a length roundtable discussion on 130/30.  Participants included US and European institutional investors.  It’s interesting.  But be forewarned, this is a lightly edited transcript that runs 6,500 words.

CalPERS to go 1X0/X0. FT reports that CalPERS CIO Russell Read is interested in 1X0/X0.

Hedge Funds Attracting Pensions, College Endowments. Bloomberg reports that hedge funds “are attracting more pension funds, foundations and college endowments that seek to diversify assets and boost returns.” Apparently, US pensions & endowments have increased their hedge fund allocations by over 50% and Japanese pensions and endowments have increased such allocations by a third.  (more on Japanese adoption of alternative investments in the Financial Times)

Halcyon days for SPACs? Halcyon Asset Management goes public in half-billion dollar reverse take-over of a “blank check” company.  This, after another hedge fund manager Asset Alliance was taken over by another special purpose acquisition company Tailwind Capital last month (see related posting).  Seems more and more hedge funds are having a big SPAC attack.

Investors want more hedge fund controls. According to Financial News, a recent PwC survey finds that “two thirds of institutional investors are not happy with levels of regulation in the hedge fund industry and have called for greater transparency and accountability.” (further coverage by Thomson)

Lyxor CEO says investors can no longer bank on fund reputation. Laurent Sayer tells Thomson that in the past, fund of hedge funds managers went for ‘best of breed’ managers to run their funds; established managers who had proven track records in terms of performance and good reputations. Now, institutions require a more in-depth selection process, rather than one based mainly on reputation.

Pension funds face disappointing returns from hedge funds in short term. Fidelity manager Anthony Bolton tells Thomson Investment News that “too much money has gone into hedge funds at a time when I think that returns for hedge funds in general will come down.”

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