With the popularity of focused strategies on the rise, Alger recently asked Greenwich Associates to explore the appetite for and popularity of focused strategies. The Power of Focus: Looking for Alpha in a Sea of Beta indicates that over the next 24 months, interest in focused equity products, which typically consist of 50 or fewer securities, is expected to increase among 56% of institutional investors. Key findings include:
• The need for increased alpha is driving the shift toward focused strategies;
• Proponents of focused strategies believe the best way to create alpha is to invest with managers who diverge from their benchmarks and allocate to their highest conviction ideas;
• Focused strategies typically exhibited lower risk, as measured by beta and down market capture, than strategies with a larger number of stocks.
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