Hedge fund investors apply core-satellite

Link to P&I article with a quote from Andrew Beer

Strategy an answer to issue of higher fees for mediocre performance

by Christine Williamson — February 6, 2017


Institutional investors are beginning to dramatically restructure their hedge fund portfolios, pairing a core allocation of cheaper alternative beta investment strategies with a satellite portfolio of alpha-generating hedge funds.

The trend is nascent but gradually gaining converts, attracting interest from asset owners fed up with paying hedge fund managers high fees for promised alpha that turns out to be market beta, observers said.

Money managers and consultants report they’ve seen huge interest in alternative beta portfolios in the past year from institutional investors of all kinds, including corporate and public pension plans and sovereign wealth funds.

… “Institutional investors’ eyes have opened to the fact that they don’t have to invest in hedge funds to get hedge fund-like returns,” said Andrew Beer, managing partner and co-portfolio manager of the dynamic beta strategy at Beachhead Capital Management LLC, New York.

Beachhead Capital manages a total of $550 million, of which $140 million is invested in the firm’s alternative beta strategy.

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February 6, 2017