the asset management industry
Industries change incrementally as business processes improve. For example, asset management has become more efficient through scale, operational improvements and marketing acumen over the past 40 years. However, the basic business model has remained the same.
But occasionally, new technologies disrupt this pattern and lay the foundation for a fundamental re-organization of industry value propositions. These “disruptive technologies” often disintermediate existing value propositions and enable customers to purchase a la carte, assembling totally customized products. The Internet is one such technology. It disaggregated traditional value propositions and allowed buyers to assemble customized offerings on their own.
Hedge funds and liquid beta instruments such as ETFs are also “disruptive technologies.” As refined sources of alpha and beta, they amount to “off-the-shelf” components that allow investors to assemble their own portfolios rather than buying what amount to “pre-packaged” alpha/beta combinations offered by mutual fund companies.
As a result, they have focused investors on alpha and shone a harsh light on the growing problem of index hugging in active management (and similarly, the problem of “alternative beta” in hedge funds).
Hedge funds, portable alpha, ETFs, “1X0/X0”, active overlays, hedge fund replication… At the core of all these emerging ideas is alpha/beta separation.
This is the alpha-centric prism through which we see the world.
The challenge of information overload
The explosion of information available on the web has been both a blessing and curse for those in the asset management industry. While the volume of data and information available on the Internet has exploded in the past few years, simply Googling for information now yields excessive dead ends, wasted time and frustration. In fact, the sheer volume of information available today makes such fishing expeditions nearly useless when making complex decisions.
There is no shortage of information available to asset management decision-makers. What is lacking now is adequate filtering and analysis. Unfortunately, this process cannot be automated. That’s why every element of our service (research, review, and uploading to our website) is executed by one of our editors or researchers. That way, decisions are made easier, not more complex.
The importance of a presence
But we can’t provide value by sitting on our office all day. So we augment this online presence with an equally robust off-line presence. Our founder was immersed in the asset management industry as a frequent speaker and a member of the Editorial Board of the Journal of Alternative Investments. We have partnered with industry consultants and event organizers to deliver proprietary research. And we are active members of the Chartered Alternative Investment Analyst (CAIA) Association and the Alternative Investment Management Association (AIMA). AllAboutAlpha.com is the delivery mechanism for the insights and comments we hear during these critical off-line interactions.