Exploring the Concept and Characteristics of “People Alpha” (Citi)

October 2013

KEYWORDS: alpha, Hedge Fund IT, Liquidity, Cornell University, Hedge Fund Performance, due diligence, operational due diligence, operational alpha, hedge funds, Institutional Investors, people alpha, assets under management, talent retention, training

Authors:

Citi Prime Finance

Organizations:
  • Citi

Summary:

In the past, having a professional operations team and robust infrastructure differentiated leading hedge funds from their peers and allowed them to claim “operational alpha” before operational due diligence became an industry norm; we now believe that a new set of differentiators is emerging in the hedge fund industry.

We have found that across our survey population, hedge funds investing in superior people management outperform their peers, registering higher average investment returns than those firms that put less emphasis on these factors. We believe that these organizations can attribute part of their return stream to their ability to add people alpha.

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