Certain investors have a primary focus on ‘hunting alpha’. Their aim is to invest for long term asset growth through a focus on high investment returns (and not on liabilities). This has historically lead to equity-heavy portfolios, often actively managed. Over recent years and decades these portfolios have generally done well. However, generating equivalent levels of return from here may be more challenging. Is it possible to go after these kinds of returns without relying on equities, and the skills of equity managers, alone? In this piece we will show how equities can sit alongside other forms of high-returning investments. In particular, how you can combine illiquid and credit-focused asset classes. These combinations create diversified high-returning portfolios. Portfolios which aren’t solely dependent on equities for their returns.
Continue reading “A Roadmap for Alpha Hunters”
Alpha describes the excess returns a fund can generate relative to the return of a reference benchmark. This benchmark return is called Beta.
Traditionally, these benchmarks were market cap weighted indices, such as the FTSE All Share or S&P 500. Since the 1970’s, it has been possible to buy cheap access to them via passive funds. Continue reading “Introducing True Alpha”
Summary: Implementing our investment principles means that it would be useful to measure the complexity of different assets and asset allocations via a complexity ranking. As complexity increases the average expected return tends to increase but the average fund manager … Continue reading Managing Complexity