AlphaArray

AlphaArray is a multi-strategy fund designed to provide an array of uncorrelated alphas – in one cost-efficient fund. 

The key theme across all of the strategies on the AI platform is the focus on alpha. In the broader investment world, many portfolio managers assume varying degrees of systematic risks (betas). We know that beta can be attained practically for free, so the provision of it is not a value-add for our investors. As a result, our efforts are singlemindedly focused on extracting only alpha from strategies. 

Knowing where to mine alpha and where not to is key in designing a successful fund. Some common hedge fund strategies, like equity long/short, do not appeal to us in most market environments. Such markets are hyper-competitive, with even the largest players struggling to eke out small amounts of alpha. We choose to invest where there is greater opportunity, be it through information asymmetry, innovation in investment structuring, capturing upside created by investor preference biases, or some other factor which results in market inefficiency. This is harder, but more rewarding. 

Because persistent alpha is difficult to find, we have structured our alpha capture process with great flexibility in order to accommodate as many potential alpha sources as possible. AI may mine alpha found in investment strategies run by talented external investment managers or may hire talented portfolio managers to our internal platform. We are largely agnostic about whether they sit on our trading desk or theirs, as long as alpha is generated via a highly regulatory-compliant process, is persistent (net of fees), and can be attained while preserving custody and control of assets. 

We often find alpha hidden in such places as:

• Esoteric markets that are not well-known 
• Strategies that less understood by many investors 
• Talented investment managers who have difficulty articulating their strategy/edge 
• Emerging markets – unique investment strategies and talented PMs are global 
• Buried deep in long-only or long-biased strategies 

The Array of Strategies 

As signaled by its name, the AlphaArray Fund is an array of strategies specifically designed to generate true alpha from liquid alternative investments. These include: 

• Volatility and Index Arbitrage 
• Quantitative Strategies 
• Macro/CTA 
• Long/Short Emerging Markets 
• Event Driven/Special Situation 
• Long/Short and Structured Credit 

We are also opportunistic. As new asset classes emerge, new securities start trading, and new markets become tradable. AI is adept at diligencing a diverse range of opportunities, determining if alpha exists, and assessing the best method to extract that alpha. 

Given that the alphas are designed to be uncorrelated (and due to multicollinearity across strategies), we do not target specific strategy weightings. We instead focus on true alpha. By getting true alpha right, the strategy source no longer needs to be a driver.