WINDSOR, Conn. — Before too long, the Alstom Inc. pension fund will have more than one-third of plan assets invested in portable alpha strategies.
What's noteworthy is that Alstom is not a large pension fund like Chicago-based BP America Inc.'s $5 billion-plus defined benefit plan, which has pioneered use of portable alpha strategies. Alstom is a $390 million defined benefit plan.
In the next few months, Alstom executives plan to employ portable alpha strategies to cover a portion of the fund's fixed-income exposure. On the equity side, such strategies have added an annualized 230 basis points over the fund's benchmark for the three-year period ended April 30.
"We think there's a couple of hundred basis points out there some place, and we've been successful in capturing it," said William Schoelwer, treasurer for Windsor, Conn.-based Alstom, the U.S. unit of the French energy and transportation giant.
And Alstom is not alone in its use of portable alpha strategies, which transfer the added value from successful investment strategies onto either an equity or a bond derivative.