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    Alternative Risk Premia

    Alternative Risk Premia
    ALTERNATIVE RISK PREMIA
    HEDGE FUND BETA

    Approach

    Our Alternative Risk Premia strategies seek to deliver returns that are differentiated from those of core equity and fixed income, with the added benefits of potentially higher liquidity, transparency and lower cost. Our strategies are rules-based, multi-asset, long/short investment strategies. We seek to harness returns across value, carry, momentum and structural styles, which are backed by academic research and are economically intuitive and persistent over time. We offer a flexible platform that allows us to apply these strategies in several ways.

    Combine
    +

    We have the ability to combine several Alternative Risk Premia strategies in a single portfolio, with the objective of delivering attractive risk-adjusted returns that are differentiated from those of core equities and fixed income.

    Customize
    +

    We can design a custom portfolio of Alternative Risk Premia strategies that are tailored to meet specific diversification risk/return and objectives.

    Complement
    +

    Our diagnostic tools can help a client better understand the risk exposures within their existing hedge fund portfolio. From there, our Alternative Risk Premia strategies can be used as a completion solution by overweighting or underweighting various alternative risk premia.

    Benefits

    Diversifying to traditional assets

    Our Alternative Risk Premia strategies seek to perform irrespective of traditional asset movements. A portfolio of alternative risk premia may allow for gains in some strategies that can potentially offset losses accrued in other strategies.

     

    Transparency

    Our Alternative Risk Premia strategies are rules-based and systematic, providing investors with transparency and potentially granting them a better understanding of how the strategies will perform in certain market conditions. We also provide in-depth monthly reports which include information on drivers of performance and detailed exposure data.
    Daily liquidity & lower cost

    The underlying holdings of our Alternative Risk Premia strategy are liquid, which allows for lower transaction costs and daily liquidity at the portfolio level. The management fees on our strategy may also be lower than traditional alternative investments, potentially providing more cost-effective implementation.

     

    Rigorous risk management

    The risk of our Alternative Risk Premia strategies is monitored on a daily basis by the portfolio managers and the independent risk management team, with emphasis on metrics such as volatility, gross exposure, position concentration and severe loss scenarios.

    Approach

    Our Hedge Fund Beta strategy seeks to deliver exposure to the varied return drivers of a diversified universe of hedge funds and styles, with the added benefits of enhanced transparency, liquidity and cost-effectiveness. We believe that a large portion of hedge fund returns can be explained by a range of traditional market factors and alternative risk premia. Alternative risk premia are rules-based, multi-asset, long/short investment strategies which have historically been employed by hedge funds.

    Quantitative and Qualitative Analysis
    +

    By using a quantitative methodology in combination with fundamental analysis, we seek to identify the return drivers that approximate the return and risk patterns of specific hedge fund strategies, including Equity Long/Short, Macro/CTA, Relative Value and Event Driven.

    Liquid, Cost Efficient Implementation
    +

    We focus on delivering the risk and return patterns of hedge funds to investors in a manner that is transparent, low-fee, provides daily liquidity and avoids headline manger risk.

    Benefits

    Transparency

    Our strategy is rules-based and systematic, providing investors with transparency and potentially granting them a better understanding of how the strategies will perform in certain market conditions. We also provide in-depth monthly reports which include information on drivers of performance and detailed exposure data.

     

    Rigorous risk management

    The risk of our Hedge Fund Beta strategy is monitored on a daily basis by the portfolio managers and the independent risk management team, with emphasis on metrics such as volatility, gross exposure, position concentration and severe loss scenarios.
    Daily liquidity & lower cost

    The underlying holdings of our Hedge Fund Beta strategy are liquid, which allows for lower transaction costs and daily liquidity at the portfolio level. The management fees on our strategy may also be lower than traditional alternative investments, potentially providing more cost-effective implementation.

     

    Focus on research

    In order to keep pace with the fast-moving hedge fund industry, we emphasize ongoing research and continued process and model enhancement, which we can implement through our robust technological platform. We formulate hypotheses about return drivers based on intuition, theory, experience and academic literature, and then rigorously test these hypotheses using historical data. Our research efforts seek to enhance existing market factors and alternative risk premia, while searching for promising new drivers of return.
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    For more information, please contact your GSAM relationship manager