Big-name managers expanding operations
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • BEX Capital brings on head of origination
      Varagon Capital fills new business development role
      Fitch Group in deal to acquire CreditSights
      Credit managers’ outlook still gloomy but brightening – survey
    • Will Martindale
      Cardano Group chooses group head of sustainability
      Meketa hires first chief marketing officer
      Nick Horsfall
      Redington names managing directors for investment consulting team
      Marsh & McLennan Agency sets sights on Compass Financial
    • Yellen calls for more COVID relief, retirement access
      A healthcare worker provides care for a COVID-19 patient in the intensive care unit at the Saint Joseph hospital in Marseille, France, on Nov. 20, 2020.
      World must act to strengthen against future pandemics – report
      New York State Common challenges Tyson’s dual-share stock structure
      Credit managers’ outlook still gloomy but brightening – survey
    • Fidelity cuts target-date asset threshold for lower fees
      DCIIA looks to spark engagement with plan sponsor institute
      Ascensus, Empower acquire Truist record-keeping business
      PCS Retirement acquires Alliance Benefit Group-Rocky Mountain
    • LaSalle Investment Management taps 2 for new ESG roles
      Sovereign credit ratings vulnerable to ESG risks — Moody’s
      JPMAM names head of investment stewardship, Asia ex-Japan
      New law requires MassPRIM to increase diversity of managers, consultants
    • Blackstone holiday video
      Blackstone would like to show you how things are done around the office
      Galina Churkina
      Building research earns honor from Aquila Capital
      MacArthur Foundation invests in women’s safe housing fund
      CAIA’s expansion to online exams yields big results
    • Shanghai skyline
      Global hedge funds struggle even in a more open China market
      The Sun Hung Kai Properties Ltd. logo is displayed on the Sun Hung Kai Centre building in Hong Kong on Sept. 13, 2018
      SHK spins out East Point Asset Management
      Man holding a business card with Hedge Fund written on it
      Hedge funds chalk up decade’s best returns in 2020 – HFR
      New hedge fund launches surpass liquidations in third quarter
    • Dodge & Cox sets succession plan for key executives
      Labor Department names new ERISA Advisory Council members
      CalPERS records 12.4% return in 2020
      Fidelity cuts target-date asset threshold for lower fees
    • Dodge & Cox sets succession plan for key executives
      Onex Partners adds head of portfolio operations
      Fidelity International launches private credit capability with team liftout
      A sign on the exterior of a Northern Trust Corp. branch in Chicago on July 13, 2017
      Northern Trust to cut 500 jobs
    • CalPERS records 12.4% return in 2020
      Maine Public Employees boosts target to alternative credit
      Los Angeles City Deferred Comp narrows list to 2 in manager search
      Connecticut pension fund CIO resigns
    • Dodge & Cox sets succession plan for key executives
      BEX Capital brings on head of origination
      LaSalle Investment Management taps 2 for new ESG roles
      Onex Partners adds head of portfolio operations
    • Pension funds continue private equity investing spree
      Big jump in private equity AUM expected over next 5 years
      Thoma Bravo takes in $22.8 billion for 3 funds
      Jason Thomas
      Data, technology become new prized possessions
    • Chiang Ling Ng
      Hines hires first head of Asia-Pacific real estate investments
      Brand new apartment building on sunny day in spring with blooming trees
      Real estate returns forecast to trend lower – report
      Ivanhoe Cambridge Inc. signage is displayed outside the company's office near Bay Street in Toronto on Aug. 29, 2011
      Ivanhoe Cambridge, PAG announce joint venture for Japan logistics investments
      Residential buildings in Hong Kong on Feb. 20, 2020
      KKR closes first Asia-Pacific real estate fund at $1.7 billion
    • Neal and Brady
      Retirement security could be only issue both sides accept
      Retirement cartoon
      Hopes rising for retirement readiness in 2021
      David Ireland
      Sponsors returning to questions about in-plan annuities
      Shawn O'Brien
      Annuities coming to target-date funds, but not right away
    • Outlook 2021
      The top 10 stories of 2020
      The best places to work in money management
      Investment consultants
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • Southeastern Pennsylvania Transportation seeks actuary for DB, DC plans
      Pennsylvania Public School Employees assigns $100 million to venture capital fund
      University of Washington looking for investment consultant
      Sacramento County Employees invests $40 million in Aristeia hedge fund
    • Southeastern Pennsylvania Transportation seeks actuary for DB, DC plans
      Pennsylvania Public School Employees assigns $100 million to venture capital fund
      University of Washington looking for investment consultant
      Sacramento County Employees invests $40 million in Aristeia hedge fund
    • International Small Cap Manager Services
      Financial Expertise
      Passive Index Manager Services
      Emerging Markets Equity Investment Management Services
    • U.S. fixed-income returns post another positive year
      Nasdaq delivers an impressive year
      U.S. dollar's recent decline continues
      Hedge funds warming up to financial sector, remain long U.S. equities
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • Retirement cartoon
      Hopes rising for retirement readiness in 2021
      view gallery
      25 photos
      Cartoons depict a year like no other
      view gallery
      25 photos
      2020 in editorial Cartoons
      Consultants cartoon
      Seeking an investment consultant? Caveat emptor
    • Climate change and emerging markets after Covid-19
      An Asset Owner's Guide to Multi-Manager Portfolio Management
      Research for Institutional Money Management
      The Future of the U.S. Dollar - Dominant currency or one of many?
    • Michael McNally
      Commentary: New ‘investment-plus’ test poses risks to private equity investors
      Adam Waterous
      Commentary: Institutions urged to act now on opportunities created by current global oil disruption
      Ron Lagnado
      Commentary: Straw man critiques don’t hold up in face of real world success
      Robert Raben
      Commentary: What the asset management industry must do to bolster diversity
    • Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
      Focus on manager diversity pushes asset owners’ to walk the talk
    • Sponsored Content By iShares
      ETFs are becoming a cornerstone of insurance equity portfolios
      Sponsored Content By Aberdeen Standard Investments
      Taking a passive approach to the hedge-fund universe
      Sponsored Content By World Gold Council
      Gold: the most effective commodity investment
      Sponsored Content By iShares
      For institutional investors, ETFs can make meeting liquidity needs easier
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • watch video
      1:24
      U.S. stocks were 2020’s comeback kid
      watch video
      1:23
      Outlook 2021
      watch video
      1:52
      Buy gold's pullback?
      Coronavirus and the S&P 500: 2020
    • Getting Back to Normal: How to Creatively Manage Fixed Income Portfolios in a Rising Rate Environment
      What might a Biden DOL and SEC mean for retirement plans?
      Staying on target with target-date funds
      The Institutionalization of Retail Part Two: A Webinar Series from P&I Content Solutions and Chestnut Advisory Group
    • POLL: Retirement issues in 2021
      POLL: Money managers' priority in Asia-Pacific region
      POLL: Retirement issues in the presidential election
      POLL: The S&P 500 in the third quarter
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • Graphic: U.S. stocks were 2020's comeback kid
      U.S. fixed-income returns post another positive year
      By the Numbers
  • Events
    • Conferences
    • Webinars
    • Defined Contribution Spring Virtual Series
      DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • Getting Back to Normal: How to Creatively Manage Fixed Income Portfolios in a Rising Rate Environment
      What might a Biden DOL and SEC mean for retirement plans?
      Staying on target with target-date funds
      The Institutionalization of Retail Part Two: A Webinar Series from P&I Content Solutions and Chestnut Advisory Group
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. Print
February 20, 2006 12:00 AM

Big-name managers expanding operations

BGI, SSgA heed clients’ demands for more portable alpha, absolute return strategies

Christine Williamson
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Barclays Global Investors and State Street Global Advisors, two of the world's largest money managers, are significantly expanding their hedge fund operations in response to what they say is client demand for portable alpha and absolute return strategies.

    San Francisco-based BGI managed $15 billion in hedge funds as of Dec. 31, a respectable number but just 1% of its total assets. SSgA, Boston, managed about $3 billion in single-strategy hedge funds as of Dec. 31. SSARIS Advisors LLC, Stamford, Conn., a majority-owned subsidiary of the State Street Global Alliance (a joint venture between SSgA and the €168 billion Stichting Pensioenfonds ABP, Heerlen, Netherlands), managed an additional $1 billion in hedge funds and funds of funds. In total, that's only 0.27% of SSgA's global assets.

    Executives at both companies are driven by an urgent need to hang on to institutional clients now — or soon to be — searching for real alpha generation.

    Both firms have big enhanced indexed businesses that already provide alpha generation for institutional clients.

    BGI, strictly an institutional manager, is building a hedge fund-of-funds operation that will launch strategies later this year. The fund-of-funds unit, known as the alpha management group, was created because the firm's internally managed, single-strategy hedge funds have been so successful, said Stan Beckers, managing director and the London-based head of the new unit.

    BGI managed $13.5 billion in market neutral, equity and credit funds at the end of 2005; these single-strategy funds are closed to new investment. A multistrategy hedge fund launched last May attracted $1.5 billion in its first seven months and soon will reach its upper capacity limit of $3 billion, Mr. Beckers said.

    Great demand

    The demand from BGI clients for absolute return strategies is larger than BGI can accommodate with internally managed hedge funds, Mr. Beckers said. BGI will apply the same quantitative and analytical approach used in managing stocks and bonds internally to selecting outside hedge fund managers "that will provide non-directional, diversified, skill-based sources of alpha," he said. No target size has been set for the hedge fund of funds, but Mr. Beckers noted that "this is not worth doing unless it puts BGI on the map and among the largest players in the industry."

    BGI is in the process of staffing the fund-of-funds effort, which will be based in London and New York. Jonathan Morgan was hired as managing director to head the hedge fund-of-funds manager research and selection operations. He was chief investment officer of the alternatives business of Julius Baer Investment Management Inc., New York. William Marr, Julius Baer‘s global head of alternative investments, declined to comment on Mr. Morgan's replacement.

    SSgA is strengthening and expanding its internal single-strategy hedge fund management with plans to combine those strategies into a new multistrategy hedge fund it will launch at the end of the first quarter or beginning of the second quarter. The move is the logical next step in separating alpha and beta sources, a process that has been evolving for the last few years, said Jane Tisdale, managing director of hedge fund strategies.

    Seven single-strategy hedge funds now are offered by SSgA. The latest fund, boasting a fixed-income absolute return rate strategy, was launched at the end of December.

    Creating the multistrategy hedge fund required a "significant initiative" to expand the number of hedge fund strategies managed internally and to add support in Boston and London, Ms. Tisdale said. SSgA executives are still looking for talented investment management staff and teams. Although Ms. Tisdale declined to say how many more people would be hired, reports said the number might be as high as 30.

    "We will continue to add new investment strategies to the multistrategy fund and may launch new funds as well. We won't stop at 20 strategies or anything like that. The hedge fund space is growing and changing all the time, and we will need to adapt along with it," Ms. Tisdale said.

    No surprise

    Industry sources aren't surprised that executives at large money managers are on the prowl for hedge fund capability.

    "Any managers that have a large institutional client base, or want one, have a need for internal hedge fund management," said Eric C. Weber, partner and director of the asset management practice at Freeman & Co., New York, an investment bank.

    But observers say it has been difficult for some large financial services companies to create successful hedge fund businesses internally. They point to a recent rash of hedge fund and fund-of-funds acquisitions as proof that most investment management companies want hedge funds, but recognize that building them from scratch probably won't be fast or successful.

    "Very few big institutions that have tried to build hedge funds have much to show for it. Many are between one and three years into the process and are not showing results," said Joe Hershberger, managing director at the investment bank Putnam Lovell NBF, New York.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    Targeting millennials: Author, niece put his latest book to music
    Targeting millennials: Author, niece put his latest book to music
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    Research for Institutional Money Management
    Sponsored Content: Research for Institutional Money Management
    sponsored
    Events
     
     
    Sponsored
    White Papers
    Climate change and emerging markets after Covid-19
    An Asset Owner's Guide to Multi-Manager Portfolio Management
    Research for Institutional Money Management
    Bond ETFs show maturity during Covid market mayhem
    Global gold-backed ETFs: A popular gateway to the gold market
    The Future of the U.S. Dollar - Dominant currency or one of many?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center