The asset management industry is undergoing profound changes. Financial innovation and the proliferation of passive investment vehicles increases competition for the asset manager and choice for the asset owner, while generating returns needed to cover liabilities and achieving portfolio diversification is getting increasingly challenging. Against this backdrop, the goals of asset management, the relationship between asset managers and asset owners, and the very definition of investment success, are changing too.
Bernstein Alphalytics helps keep our clients at the forefront of change. It draws on our research, thought leadership and expertise to set a new consistent standard and offer new tools for measuring manager success and skill by identifying their idiosyncratic alpha – or alpha that is generated net of common factor exposures. With the price of these exposures via smart beta products rapidly falling to zero, idiosyncratic alpha becomes a key measure of the value that an asset manager is generating in an active and non-replicable way, and a key determinant of how asset owners allocate fees to asset managers.
Alphalytics measures, compares and analyses idiosyncratic returns, long term and tactical style tilts and many other attributes for thousands of asset management products spanning different asset classes. Through an interactive, web-based front end, asset owners can identify products that best suit their needs and construct fund portfolios that offer desired aggregate style exposures and the most diversified returns and idiosyncratic alpha streams. For asset managers this is a way to demonstrate measurable skill and value added, and diagnose and fix problems.
Drawing on Bernstein's industry-leading research on fund management strategy and idiosyncratic return, Alphalytics will offer research on a wide range of topics in portfolio construction and investment behaviour and in-depth bespoke support to clients to help them 'unlock' their skill in generating true alpha and deliver optimal outcomes for the end investor.