Alpha, Beta & Bicycles
Oct 23rd, 2006 | Filed under: Portable Alpha & Alpha/Beta SeparationBy: Michael Dalis, State Street Global Advisors
Published: August 24, 2006
Saddle up for the “Tour de Alpha”!
Michael Dalis of State Street compares asset management to a bicycle race (work with us here). He says that no one has ever won the Tour de France without first cooperating with his competitors. Like an episode of “Survivor: Pyrenees“, cyclists must work together to stay in the game - taking turns slip-streaming behind each other until the last few kilometres.
Dalis says that alpha/beta bifurcation and the further separation of various betas and alpha sources allow managers to focus on their “edge” and allows them to work together without eating each others’ lunches. For example, he suggests active managers throw in the towel on beta management, relinquishing this to a ”beta manager” that:
To continue reading this article please login (at the right) or click here to learn more about accessing our archives.
