The combination of last year’s large sell-off in the financial markets, a challenging macroeconomic environment, and heightened volatility has led institutional investors to reassess their strategic asset allocation. Guiding these reassessments is the central question of how best to fulfill the dual mandate of generating attractive returns, while providing downside protection for the portfolio.
Hedge funds are an important component in institutional investors’ asset allocation. Indeed, several recent surveys indicate an expected increase in allocations to hedge funds and other alternative investment strategies in 2023, with investors increasingly adopting alternative risk premia (ARP) strategies as a substitute for traditional hedge funds. Buoyed by the global trend towards internalization, institutional investors are fashioning bespoke ARP strategies inhouse to profit from improved cost efficiency and increased transparency.
This whitepaper explores the theoretical underpinnings of ARP strategies and their historical development. After discussing these fundamental principles, the report presents an empirical study of ARP across all major liquid asset classes. Download your copy of the whitepaper below.