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Cost-effective exposure to alternative risk premia

Alternative risk premia deliver transparent, cost-effective diversification to traditional portfolios

cost-effective exposure to alternative style premia
1bn
USD invested capital
9
professionals
8 year
track record

Institutional investors are increasingly turning to alternative risk premia (ARP) to get exposure to more liquid and transparent diversifying strategies that are also cost efficient. Investor demand has spurred the rapid growth of these strategies, boosted by improvements in technology, increased regulation and lower expectations for future returns. The emergence of ARP strategies is a boon to investors, as it has resulted in a broader toolbox for constructing diversified, cost-efficient portfolios. With these strategies, investors can get exposure to four different alternative style premia by investing directly in a variety of highly liquid, listed futures according to clearly defined investment rules.

 

  • Tactical – rotational and seasonal long-only strategies
  • Convergence – relative value, spread and contrarian strategies
  • Momentum – trend-based directional long or short strategies
  • Long volatility – tail risk strategies for phases of elevated market stress

Since the styles are complementary, with their own distinct risk profiles, they all contribute to portfolio returns during different market conditions. They also provide an attractive source of diversification to equities and government bonds.

Robust risk analysis and monitoring

Portfolios are subject to robust risk analysis and monitoring during the entire investment process. Our team questions each initial investment thesis and manages portfolios in a tightly controlled environment. They also adhere to a variety of limits, from exposures per asset class to overall portfolio VaR and volatility caps.

Few firms are better placed to manage the risks and extract the benefits of these styles than LGT Capital Partners, as we have a 20-year track record of hedge fund investing. We can leverage the combined expertise of a team of 56 hedge fund professionals, based at investment hubs in New York, Pfaeffikon (near Zurich) and Hong Kong. This platform has enabled our team of nine ARP specialists to become pioneers this space, generating an 8-year track record.