SSgA Snags $200M Hedge Fund Replication Mandate

Mar 17 2008 | 10:16am ET

State Street Global Advisors has been appointed by Universities Superannuation Scheme to manage a $200 million hedge fund replication mandate. The portfolio will be managed on a segregated basis by SSgA.

SSgA has worked in conjunction with hedge fund academics Bill Fung and Narayan Naik of the London Business School and David Hsieh of Duke University, as well as the consultant firm JTP Partners, in developing an offering for USS. The Hedge Fund Beta Replication Strategy is aimed at replicating the average performance of a universe of hedge funds through indexing techniques based on Fung, Hsieh and Naik’s analysis of the investment returns of hedge funds.

According to academic analysis, 85% of returns by the average fund of hedge funds can be attributed to a collection of risk premiums of market returns rather than the active management skills of hedge fund managers. These risk premiums include equities, credit, bond market duration and market volatility, all of which SSgA said it can replicate at a significantly lower cost.

“We are convinced of the merits of hedge fund replication as a way of gaining transparent, liquid and low-cost exposure to the risk premia that drive the majority of hedge fund returns,” Michael Powell, head of alternatives at USS. “We see this strategy as a core part of our integrated approach to investing in hedge funds alongside our single manager hedge fund program.”

State Street Global Advisors managed $2 trillion in assets as of the end of December 2007.


In Depth

Q&A: High Conviction, Low Correlation

Oct 30 2014 | 7:35am ET

Acadian Asset Management's numbers are big: over $70 billion in assets under management...

Lifestyle

Ex-Hedgie Steyer Gives $56M To Climate Action Super PAC

Oct 28 2014 | 9:23am ET

Retired Farallon Capital founder Tom Steyer has poured almost $56 million into his...

Guest Contributor

Hedge Funds Weather A Data Management Perfect Storm

Oct 22 2014 | 12:28pm ET

From a regulatory standpoint, nearly every development since the crisis has placed...

 

Videos

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

October 2014 Cover

Demeter: Family affair

David and James Hamman launched their fundamental Livestock and Grains Program in March of 2010 but it really was decades in the making.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.