There are two main avenues for investors to think about when approaching the use of alternative beta in an investment portfolio.
The first is to adopt a core/satellite approach to constructing an alternatives allocation, where alternative beta occupies the core, and high conviction alpha hedge fund managers work in the satellite. The second is to think of the strategy as an "alternative to alternatives," where high-cost hedge funds are replaced with lower-cost alternative beta.
The JP Morgan Systematic Alpha Fund can address either scenario, capturing returns from alternative beta by using long and short positions. Through systematic investment processes the fund focuses on reducing manager-specific risks associated with hedge fund investing.
In this edition we talk to J.P. Morgan Asset Management portfolio manager Yazann Romahi, who says these strategies are attractive because of the low-cost, transparent and daily liquid access to hedge fund risk premia.
Read the article here for more.