Understanding Alternative Beta

Alternative beta is the concept of managing volatile "alternative investments" and it is also referred to as "alternative risk premier". Alternative Beta strategies have historically been associated with hedge funds. Although the underlying traded instruments are often traditional equities and bonds, the returns are generally de-correlated from equity and bond benchmarks. While these strategies have now made their way into more mainstream investment circles, the investment styles continue to be known as “alternative.”

Alternative Betas offer returns correlated to well-known alternative benchmarks, rather than traditional equity or bond benchmarks. It is assumed to be a standard implementation of a standard alternative strategy.

A diversified Alternative Beta program is a mix of simple, well justified strategies, seeking to deliver persistent excess returns with scalable capacity, while exhibiting low correlation to traditional equity and fixed income benchmarks.

To see if an Alternative Beta program is right for you, contact a Salt Adviser today.

Belinda Frazer