UK Plans Think, But Don’t Act, on Portable Alpha

Sep 12th, 2006 | Filed under: Portable Alpha & Alpha/Beta Separation | By:
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By: Beatrix Payne, Pensions & Investments Magazine
Published: July 10, 2006

Excerpts: 

“U.K. institutions are investigating the use of portable alpha with their money managers, but few U.K. pension plans have implemented such a strategy. 

“So far, only a few pension plans have adopted explicit portable alpha strategies, mainly in their fixed-income portfolios, in an attempt to improve returns, said Roger Urwin, global practice director, investment consulting, at Watson Wyatt Worldwide, Reigate. But it’s an idea whose time is about to come. There is a lot of investment efficiency left on the table if you don’t separate alpha and beta, he said.”

“While explicit portable alpha mandates are rare, managers of active currency overlay and global tactical asset allocation mandates widely use this type of strategy. So, many U.K. pension plans are making use of portable alpha without realizing it…”

“[Simon Chinnery vice president at J.P. Morgan Ltd., London] added that J.P. Morgan will launch a pooled portable alpha fund this fall, aimed at midsize U.K. pension plan clients, with a target return of cash plus two percentage points.”

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  1. [...] These cautionary notes have also surfaced elsewhere in this blog. [...]

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