Alternative Risk Premia
Alternative Risk Premia (ARP) is designed to deliver diversifying returns to traditional assets. The strategy targets 90 Day T-Bills + 5% p.a. return with a 10% volatility. The equity beta is systematically managed (ex-ante) to ≤ 0.2.
Our team seeks to build a market neutral portfolio that does not rely on the most common sources of returns but systematically seeks to extract sources of return within asset classes to build broader, more diversified portfolios. Some returns traditionally thought to be ‘alpha’ can be explained by alternative risk premia and embody these diversifying properties.
The Alternative Risk Premia strategy seeks a low correlation to equities and bonds and can offer valuable diversification with robust and persistent returns. It is diversified across asset classes, strategies and styles. The team adjusts for investable strategy breadth and tail risk.
Take a multi-asset approach
- ARP are the drivers of return within asset classes
- ARP across asset classes may share similar features, however respecting asset class specifics is key
- Well constructed ARP portfolios can generate returns that diversify traditional assets
- Not all ARP are equally diversifying through time
- Risk has many perspectives, managing them is key to maintaining diversification
Avoid false precision
- Markets will never perfectly fit models; appreciate imprecision in your approach
- Seek transparency of exposure
- Markets evolve, ongoing research is paramount
- Open, collegial research conducted across investment teams makes the best of our combined experience
- Commingled Vehicle
- Separate Account