NEW YORK (HedgeWorld.com)–A survey by State Street Corp. of institutional investors with combined assets of more than $1 trillion indicates that most want to tailor their portfolios by using methods to separate market, or beta, returns from above-market alpha.
Of study participants, 81% said they engaged new managers for both alpha and beta returns, and a majority (59%) said they are able to differentiate between a given
manager’s market and above-market results. Among those who said they could not
differentiate, 82% attributed this inability to a lack of tools or resources.
State Street conducted the poll late last year together with the 2005 Global Absolute Return Congress. Respondents included global corporate pensions (18%), public and government pensions (42%) and endowments and foundations (40%).
“As investors become more aware of the benefits of separating alpha and beta, asset managers who can provide a wide range of beta exposures and interchangeable alpha sources are uniquely positioned,” said Jane Tisdale, managing director of hedge fund strategies for State Street Global Advisors, in a statement.
“Access to customizable resources such as alpha porting techniques offer increased transparency in measuring and rewarding performance and allow the flexibility to increase portfolio diversification with a low tracking error,” she said.