NEW YORK — Citigroup Alternative Investments is poised to launch a series of portable alpha strategies using home-grown investments as the alpha engine.
CAI manages $35.5 billion through five business units — hedge funds, real estate, private equity, structured products and managed futures. But it has the capacity and the intent to manage far more, said Dean S. Barr, director of liquid investments and one of the big guns in the industry's development of portable alpha strategies.
Mr. Barr joined New York-based CAI early this month and is charged with introducing the firm's first portable alpha strategies in the first quarter of 2006, he said. He most recently was president and chief executive officer of Thunder Bay Capital Management, New York, a hedge fund he founded in 2003. He said he chose to return to a large, corporate environment because he became convinced that in a low-return environment, with "too many players chasing too few opportunities, it will be very hard to find returns" for any but the largest, best-resourced money managers.
"There is a tsunami wave of institutional capital that will be going into absolute-return strategies, in addition to the high-net-worth investors who are already there. Institutional investors aren't going to be moving money into small players. They will want to invest with large, well-established, well-resourced managers with credible names. Citigroup Alternatives has the resources, the capital commitment from its parent company, which is a co-investor in our strategies, and the ability to raise a very large-scale alternatives business," Mr. Barr said. About 30% or $10.7 billion of CAI's assets are managed on behalf of its bank parent, Citigroup Inc.