The 'New Normal' for Institutional Investors Volume One

At Novus, we are firm believers in investing in skill and its tangible benefit over perception and a recency of returns. Our roots lie in hedge fund allocating, and we’ve witnessed several regimes of evolution in the space. Our research clearly shows that alpha generation is harder than it was 10 or even 20 years ago. Rather than abandoning active management, we believe internal tooling, process, and self-reflective analytics are more important than ever. In a world of scarce extrinsic alpha, Institutional Investors (and by extension managers) must manage intrinsic sources of alpha.

In this report, we outline several concepts around mean-reversion, the need for better GP/LP alignment, diversification benefit of assets, and true measurement of performance to help Institutional Investors grapple with this ‘New Normal’ in hedge fund allocating.