SSgA Offers Investors HF Beta Replication Strategy

Nov 14 2008 | 11:49am ET

State Street Global Advisors is now offering its hedge fund beta replication strategy via the firm’s new investment company, State Street Global Advisors Luxembourg SICAV.

Dubbed Premia, SSgA’s strategy seeks to generate long-term capital appreciation while mitigating the manager-specific risk and high fees associated with direct hedge fund investment. This strategy uses modern indexing techniques to approximate the overall exposure of hedge funds to systematic market, or “beta” risks.

State Street developed the strategy with academics William Fung and Narayan Naik of the London Business School and David Hsieh of Duke University.

“The Premia strategy is an appealing alternative for investors interested in gaining low-cost exposure to the risk premia that research suggests drive the majority of hedge fund returns, while providing the liquidity and transparency that many clients require,” said Kanesh Lakhani, senior managing director of State Street Global Advisors in the U.K.

Versions of SSgA’s Premia strategy have been in place for more than a year in a variety of segregated mandates.

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