Unique Managers and Strategies
High Conviction Investments
Alpha-driven
since 1998
Unique Managers and Strategies
High Conviction Investments
Alpha-driven
since 1998
Company Background
BenchmarkPlus is an investment manager and adviser. The firm provides an asset management platform in addition to thematic, specialty alternative funds. We believe the effective use of alternative investments drives successful active management. At BenchmarkPlus, we've been managing portfolios and bringing to market innovative solutions for over 20 years. Our highly skilled team is specifically assembled of professionals with diverse and practical experience executing direct investments across a wide range of capital market activities, having held previous positions with top-tier institutions. BenchmarkPlus is a registered Investment Adviser with the U.S. Securities and Exchange Commission*. We provide services to a global suite of clients, both individual and institutional.
Core offerings include:
- enhanced index offerings
- active long/short equity hedge fund strategy
- market neutral, low volatility solutions
Investment Philosophy
The central tenet of our investment process is the belief that market inefficiencies exist due to investor behavior and structural market constraints. BenchmarkPlus has a long history of capturing these inefficiencies in markets that are under-capitalized, have high barriers to entry, or are experiencing severe disruptions where price and underlying value diverge. In our view, skilled investment managers are able to generate excess returns above broader index-based averages by using their specialized knowledge to hone in on mis-priced opportunities across markets. It is these managers, who have demonstrated a repeatable edge in capturing fleeting market inefficiencies, which make up the core of every BenchmarkPlus offering.
While identifying alpha opportunities is our primary goal, long term investment success cannot be achieved without careful attention to measuring and managing the multitude of risks that accompany the act of investing. We construct a dynamic customized benchmark for each investment which seeks to account for the entirety of factor exposures within a manager’s portfolio and offers insight into their actual alpha-generating ability.
It is critical that we understand the complex risks in our portfolios. From the bottom-up, we aggregate the systematic market exposures from our portfolio of investments. Our three-step process attempts to identify and manage all systematic risks while diversifying away any common strategy or residual factor risks. The goal: portfolios with highly attractive risk-adjusted returns and low correlations to common market factors.**
The BenchmarkPlus Real Alpha™ investment process seeks to discover fund managers that we believe are exceptionally skilled at exploiting one or more market inefficiencies and have demonstrated competitive advantages that allow them to produce consistent alpha. We utilize a proprietary benchmarking process for each fund manager that allows us to properly assess their alpha-producing capabilities. The goal is to create a diversified alpha engine with insignificant correlation to market indices and low correlation to other hedge funds. Our Market Neutral and Enhanced Index / Portable Alpha products are built on this foundation.
Sourcing Alpha Rich Investment Opportunities
Our investment process seeks to uncover exceptionally skilled managers capable of consistent alpha production. We invest with managers who we believe actively exploit market inefficiencies and demonstrate a clear competitive advantage in capitalizing on those opportunities. In our experience, there are parts of the capital markets where inefficiencies exist, preventing "price" and "fair value" from converging, resulting in mis-pricings and dislocations. We believe these discrete corners of the securities markets are the areas where profitable, asymmetric investment opportunities can be found. We also believe that managers who seek to exploit clearly identifiable opportunities have the highest probability of producing alpha.
Monthly expected alpha contributions are closely monitored and outliers are thoroughly researched and documented. Regular Investment Committee meetings serve as the forum for continuing dialogue regarding all aspects of our products. The search for new managers and frequent regular meetings with current managers is an ongoing part of our investment, due diligence and risk management processes.
What is “alpha” and how do you know if your hedge fund manager is actually delivering any? At BenchmarkPlus, we define alpha as a manager’s excess return over a benchmark that accurately reflects the systematic exposures within their portfolio. By attempting to accurately define an appropriate benchmark, we endeavor to define and measure the components of a manager’s return and identifiable risk exposures (alpha and beta).
An effective benchmarking process will answer several key questions:
Answers to these questions require not only a sound quantitative foundation; they also require a thorough knowledge of the strategy the manager is undertaking and the ability to reconcile the differences between realized returns and the manager’s projected results. We believe, an effective benchmark provides a pragmatic solution for grasping the nature and extent of the systematic risks within a portfolio. Additionally, the benchmark provides an objective standard for evaluating the pattern of performance, its reasonableness as well as consistency with the manager’s stated investment philosophy and objectives.
Constructing "Outcome Oriented" Portfolios
The benchmarking process provides us with actionable information that can be incorporated into a risk management overlay: a mechanism that seeks to protect against adverse market moves that may overwhelm the alpha production of the portfolio. While the primary purpose of our risk management protocol seeks to avoid losses attributable to market moves (similar to, but more encompassing than a tail-hedging program), it also has the potential benefit of reducing the volatility and market correlation of our investment solutions.
We utilize an alpha based optimization process that seeks to diversify any remaining common factor exposure that could negatively impact our portfolios during periods of market stress. This forward-looking optimization process seeks to create portfolios that offer a strong combination of underlying managers with high expected alpha at an acceptable level of expected volatility.
Targeting the desired outcome of our end investors, comprehensive solutions are constructed with the use of derivatives and other market instruments. Customized solutions cost-effectively combine alpha and beta sources delivering a portfolio purposely structured to meet our investor's complex and unique needs.
Delivering Customized Portfolio Solutions
For nearly two decades, BenchmarkPlus has been managing alpha-centric hedge fund based portfolio solutions. Core products include low volatility market neutral funds of hedge funds and our enhanced index platform offerings.
Our unique investment process allows us the flexibility to create customized solutions targeting specific market sectors or outcome oriented portfolios. Expanding into the replication space, there are tracker portfolios that have historically matched the returns and risk attributes of their respective index while exhibiting extremely low tracking error. Partnering with end clients, we can build comprehensive portfolios combining the best manager and trade ideas that our deep and experienced research team see on a daily basis.
Market Neutral
Born from the Real Alpha™ investment process, we believe our Funds are the quintessential market-neutral investment choice for investors seeking an "absolute return" opportunity. Our market-neutral funds are constructed to provide an alpha-centric return stream with minimal correlation to the broad equity or fixed income markets.
Enhanced Index
We believe combining market neutral, alpha centric portfolio returns with an underlying market-based index is the most appropriate construct for "enhanced-index" solutions. Cost-effectively combining alpha and beta exposures, BenchmarkPlus has managed Enhanced Index funds since the launch of the firm's flagship product in 1998. Current solutions span the equity, fixed income and commodity markets.
Opportunistic
A growing body of research shows that highly-skilled, active managers are superior investors and should outperform their peers. It is in our view these skilled investors can maximize long-term returns by holding a more concentrated portfolio of their best investment ideas. Focusing on unique opportunities in market sectors under-represented or often overlooked by most investors, BenchmarkPlus believes there is a compelling opportunity to benefit from a concentrated portfolio of high conviction investments.
Long / Short Equity
Dampening the effects of downside volatility from long-only equity allocations, investors have embraced the benefits of investing in Long / Short Equity. In our view, active long / short portfolios continue to capture a significant portion of the equity risk premium needed for long term investment performance, while limiting portfolio drawdowns that may have disastrous effects on compounded returns.
Market Neutral / Real Alpha ™ Funds
Born from the Real Alpha™ investment process, we believe our Funds are the quintessential market-neutral investment choice for investors seeking an absolute return opportunity. We manage three separate Real Alpha™ funds that all utilize the same investment process.
Enhanced Index Funds
We believe that combining any of the market-neutral funds with an underlying market-based index can be a rewarding means for creating "enhanced-index" solutions. BenchmarkPlus has constructed Enhanced Index funds that seek to cost-effectively provide this combined alpha and beta exposure to our investors.
Long / Short Equity
Dampening the effects of downside volatility from long-only equity allocations, investors have embraced the benefits of investing in Long / Short Equity. In our view, active long / short portfolios continue to capture a significant portion of the equity risk premium needed for long term investment performance, while limiting portfolio drawdowns that may have disastrous effects on compounded returns.
Performance estimates are updated on the 5th business day of each month. Please note that these are very preliminary estimates and are subject to change. More finalized numbers are available around the 10th business day of each month.
Press and Research
The Real Alpha™ Process
Focusing on market inefficiencies, the investment process seeks to uncover exceptionally skilled managers, directly neutralize their systematic risks, and optimize portfolio performance.
The Journey to Second-Level Thinking
Manager selection, portfolio management, and the generation of alpha. Our goal in this leg of the journey is to provide a foundation for second-level thinking as applied to investing in hedge funds. We believe we have successfully managed a portfolio of hedge funds using this second-level thought and process for over 18 years.
Hedge Funds Review: Deconstructing Alpha
BenchmarkPlus seeks to isolate the alpha component of hedge fund returns by benchmarking and hedging the systematic risk embedded in alternative strategies. Kris Devasabai reports.
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Contact Us
For more information on BenchmarkPlus funds, please call or email us at InvestorRelations@bpfunds.com
Corporate Headquarters/Portfolio Management
820 A Street
Suite 700
Tacoma, WA 98402
Phone: (253) 573-0657
Robert Ferguson, Managing Member
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