Industry observers said they expect to see more products that seek profits from non-traditional sources.
"I don't think enough investors take advantage of the fact that implied (expected) volatility will usually be higher than realized volatility," said Joanne Hill, managing director of equity product strategy at Goldman Sachs & Co., New York. "This product is unusual, though, because usually this type of product is managed without the (investor) being aware of exactly who is actually managing the money."
Mark Settles, managing director and head of marketing for alternative investment strategies at JPMorgan Asset Management, New York, said institutional investors have been seeking strategies that both dampen risk and deliver alpha. "I think the trend has been clear that investors no longer want the same old long-only, traditional investment product," he said.
Greg Moore, director of manager research at investment consulting firm Segal Advisors, New York, said that AlphaPure is unique. "I haven't seen any money managers openly partner with an investment bank to offer this type of product. Typically, managers usually choose who they trade with. This isn't typical."
Mr. Styrcula suggested AlphaPure might represent the future of money management, and said it will be offered to both institutional investors and high-net-worth individuals.