AQR Capital Management’s Post

Name: Exploring Portable Alpha
Uploaded: 2024-10-17T21:09:14.094Z
Duration: 2 min 45 s
Channel: AQR Capital Management
Description: Our latest Quick Take video covers the potential benefits of a portable alpha approach over traditional long-only active management The key takeaways: - Long-only active equity has been challenging; and -Portable Alpha may incorporate more alpha into an investors’ equity allocation

AQR Capital Management

109,999 followers

1mo

Our latest Quick Take video covers the potential benefits of a portable alpha approach over traditional long-only active management The key takeaways: - Long-only active equity has been challenging; and -Portable Alpha may incorporate more alpha into an investors’ equity allocation

2 Comments

Ntuthuko (Zwide) Nxumalo

Manager Research Analyst at PPS Investments

1mo

AQR Capital Management: Using hedge funds as an underlying alpha component sounds great in theory, but there are risks to this approach. 1) the volatile nature of hedge funds means that you are likely to deliver returns below the funding cost; 2) daily/monthly margin requirements can lead to liquidity issues as hedge funds may not be as liquid as money market assets, especially in difficult market conditions. What are your thoughts? Can these risks be well managed?

VDC Capital

1mo

Very informative

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That does resonate with our analysis that the ultimate beneficiary of the private credit lending program will be smaller firms and not the giants. By focusing on fixed income, you will miss out on the upside. Therefore a hybrid model needs to be adopted. And the smaller firms are best to execute that model.
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When investing in Mutual Funds, do you prioritize your financial goals or focus solely on returns? Some investors choose to redeem part of their investments after achieving exceptionally high returns. However, they are not sure where they should reinvest those funds. Often, the smartest strategy is to stay invested and allow your money to compound over time, maximizing growth potential by staying focused and ignoring the market noise.
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Craig A T Jones

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I might add that smallest is best. Our average EBITDA purchase multiple over the past 3 years is 5.25X and average debt:equity ratio less than 1.0. Average EBITDA: debt ratio about 2.0.
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Attractiveness formula of lower middle market deals. Lower EV / EBITDA ratio + less debt = better returns with less risk. Great playbook for many private equity and independent sponsors. #independentsponsor #privateequity #lowermiddlemarket
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