State Street Investment Management argues that enhanced equity strategies can improve portfolio efficiency by delivering more consistent risk-adjusted returns while preserving the diversification benefits investors expect from a core allocation.
- Enhanced strategies historically experienced smaller relative drawdowns and underperformed benchmarks less frequently than higher-conviction active approaches.
- The paper contends that traditional core-satellite portfolios can either concentrate manager risk or become overly diversified, reducing efficiency and increasing costs.
- By tightly controlling active risk and minimizing exposure to uncompensated factors, enhanced portfolios aim to deliver more predictable alpha and stronger risk-adjusted outcomes.
Read the full paper for a deeper examination of portfolio construction, active risk management, and the evolving role of systematic equity strategies.
Continue reading this article?
Register for free and get access to Investment Officer International:
- Exclusive for professional investors
- Cancel anytime
- Unlimited access: web, app and newsletters
Registration takes less than 1 minute.
No payment details required
Register for free and get access to Investment Officer Luxembourg:
- Exclusive for professional investors
- Cancel anytime
- Unlimited access: web, app and newsletters
Registration takes less than 1 minute.
No payment details required
