By
Borsgade
In this short article, the team at AQR discuss the concept of ‘portable alpha’ as a strategy for enhancing investment returns, especially in the context of rising stock market valuations and the expectation of lower-than-average equity returns.
It highlights the limitations of traditional active management in long-only equity investments and suggests portable alpha as a viable alternative. Portable alpha involves utilizing the active management skills of hedge funds within a long-only investment framework.
Although the concept is not new, the article notes that its implementation has significantly improved over time, offering investors a straightforward method to incorporate diversified and higher-quality alpha into their investment portfolios.
In today’s marketplace, investors have access to bundled products (i.e., hedge fund alpha plus the beta of your choice) that are simple, single line items alongside typical long-only investments. We believe that today more investors (finally) have a viable way to get higher, and higher quality, excess returns into the equity sleeve of their portfolios.
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