State Street Global Advisors have launched a fund to approximate the beta returns of hedge funds by determining which market factors have driven the performance of the market.
The fund, named the Global Alternative Beta fund, will watch the HFRX Global Hedge Fund index, which includes a variety of strategies such as event driven, relative value arbitrage, and equity hedges. Based on the index, it will determine what trends are driving performance and produce returns without direct investment in hedge funds.
State Street said this will create a more liquid and cost-effective alternative for investors.
See also: BlackRock to close two impact strategies and BGF Future Consumer fund
Frédéric Dodard, EMEA head of multi-asset portfolio management at State Street Global Advisors, said: “This new fund launch gives investors exposure to a diversified set of hedge fund returns through a repeatable investment process and daily liquidity. This allows our clients to access this asset class in a scalable way and without the traditional constraints typically associated with hedge fund investing, such as high costs or illiquidity.”
While State Street has around eight years in hedge fund replication, the fund will create easier access for the EMEA market. The fund has an initial £123m investment from Quilter Investors and is registered in the UK as well as European hubs such as Ireland and Luxembourg.
Sacha Chorley, portfolio manager at Quilter Investors, said: “We’re pleased to partner with SSGA to offer our passive fund of fund clients access to the diversification benefits of alternatives. Alternatives are a key component of our portfolio construction, as they complement more traditional risk diversifiers of cash and bonds and have proven to reduce the drawdown risk of multi-asset investments in volatile markets.”
“Historically, there has been a lack of availability of passive exposures of the alternatives universe, and SSGA has developed a unique replication methodology that captures the essence of the alternatives universe with minimal complexity. We are excited to work with SSGA to bring this innovative solution to our clients.”
