Big must be in the eyes of the beholder. Just the other day came a report that State Street Global Advisors was bulking up its hedge fund staff to compete with Barclays Global Advisors. Now BGI apparently isn’t satisfied to have $1.5 trillion AUM, with an estimated $13 billion of that in hedge funds; it’s planning to launch a fund of hedge funds business. Stan Beckers, managing director of the firm’s alpha management group told Pensions & Investments Online that the decision to create the new unit, set for later this year, is in response to demand for pure-alpha products from institutional clients. Beckers says the FoFH will use the same approach to as it does when it chooses outside hedge fund managers, namely to “provide non-directional, diversified, skill-based sources of alpha.” He added that the new unit – which will be run by Jonathan Morgan, former chief investment officer of Julius Baer Investment Management‘s alternatives business – will also serve as a source for alpha for BGI’s portable alpha strategy.
Beckers noted in the P&I interview that “this is not worth doing unless it puts BGI on the map and among the largest players in the industry.”