Institutional Allocators Want Alpha, But They Aren’t Getting It

In the US, hedge fund investors appear to be a forgiving lot. While “alpha generation” is listed as the top goal of investing in a hedge fund, JPMorgan’s 2018 Institutional Investor Survey also notes that performance failures are a key concern. The annual report from the bank’s Capital Advisory Group looks at motivations and finds that attitudes towards risk management, correlations and diversification vary across regions, with investors in Asia the least likely to expect hedge funds to beat a market benchmark.

Of the 251 investors survived who represent 83% of all hedge fund investors, a whopping 84% think finding “alpha” is their primary mandate. Investopedia defines "alpha," in part, as...