Chronicle of a Paradigm Shift in Financial Services
Welcome to AllAboutAlpha.com. You have likely arrived at this website while doing research on hedge funds, “130/30,” portable alpha, or any number of other emerging investment strategies that define the current paradigm shift in asset management.
You have likely also visited the myriad hedge fund industry websites currently available. AllAboutAlpha.com is not one of those websites. You will find that we leave hedge fund news (people, launches, closures, regulation, returns) to the news experts. Instead, we attempt to dive deeper into the seemingly disparate stories that exemplify the dramatic changes reverberating through the investment industry. We look for common threads. As a result, you will find analysis, commentary and opinion in our pages – all built on facts and studies available without charge from across the web.
Our view
Industries change incrementally as business processes improve. For example, asset management has become more efficient through scale, operational improvements and marketing acumen over the past 40 years. However, the basic business model has remained the same.
But occasionally, new technologies disrupt this pattern and lay the foundation for a fundamental re-organization of industry value propositions. These “disruptive technologies” often disintermediate existing value propositions and enable customers to purchase a la carte, assembling totally customized products. The Internet is one such technology. It disaggregated traditional value propositions and allowed buyers to assemble customized offerings on their own.
Hedge funds and liquid beta instruments such as ETFs are also "disruptive technologies." As refined sources of alpha and beta, they amount to “off-the-shelf” components that allow investors to assemble their own portfolios rather than buying what amount to “pre-packaged” alpha/beta combinations offered by mutual fund companies.
As a result, they have focused investors on alpha and shone a harsh light on the growing problem of index hugging in active management (and similarly, the problem of “alternative beta” in hedge funds).
Hedge funds, portable alpha, ETFs, “1X0/X0”, active overlays, hedge fund replication... . At the core of all these emerging ideas is alpha/beta separation. Lee Thomas, the Chief Global Strategist at PIMCO articulated the importance of this idea in 2003:
"My sense is that the world is pregnant for a revolution in investment management. It feels like 1935, when people knew that the current macroeconomic thinking didn't work and then Keynes published his General Theory. The separation of alpha and beta is similarly powerful."
How we’re responding
A new infrastructure has grown to support this new “alpha-centric” world. Consultants, software providers, administrators, professional services firms, event organizers and of course, asset managers themselves, have re-tooled over the past decade. Several of today’s leading alpha-centric companies have joined together to support AllAboutAlpha.com in its mission to:
- Distill fundamentally important developments from a flood of daily news;
- Spark conversation and debate on these fundamental developments;
- Establish a frank and open dialogue free of unnecessary complexity.
We hope you find this mission worthy of your attention, time, and contribution. If you have not already done so, we suggest you visit the “site tour” section of this website to learn more about AllAboutAlpha.com. We look forward to hearing from you.
- The editorial team and site partners of AllAboutAlpha.com
About "Alpha Male"
