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Alternative Market Briefing

US market neutral hedge fund cares for what investors actually take home

Monday, January 28, 2019

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John Morris
B. G., Opalesque Geneva:

The partners at Alloy Investments, a New Jersey, U.S.-based fund manager, believe that the current investing paradigm is broken, which means that very few active managers reliably outperform benchmarks and many active managers compensate for poor performance by taking excessive risk.

So their fund disengages from that trend by blending non-correlating models in a market neutral strategy, and following a tax-efficient program.

The Alloy US Long/Short LP fund is a US equity, systematic long/short, market-neutral fund. It is a blend of five independent non-correlating models, each tailored to produce alpha in very specific market segments. The blended return, the "alloy", reduces overall price volatility of individual model returns while optimising it.

"We are factor-neutral unlike many systematic programs," John Morris, partner at Alloy, tells Opalesque. "We produce a pure market-neutral return profile. Typically 90% of our returns come from idiosyncratic stock risk. That is alpha generation. Alloy shows little correlation to other quantitative managers, some of whom have struggled recently. We are doing things differently."

We are not necessarily in a one-way market any more

"A famous hedge fund manager said, "only an idiot hedges in a bull market,"" he continues "That sentiment may have been the zeitgeist of a time which I think has passed. We ......................

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