Integra Capital Management’s unique value proposition is to research and deliver traditional and innovative strategies that meet and anticipate our clients’ evolving objectives. With respect to this proposition, the use of alpha beta separation is central to Integra’s current research agenda and product delivery.

Integra’s clients and prospects are institutional investors such as pension, endowment and foundation funds. Because of their fiduciary obligations, this group of investors has specialized needs. In researching managements and strategies to implement in its alpha beta separation program, Integra seeks to include a number of essential elements for fiduciaries-liquidity, transparency, purity of alpha and capacity.

One of our basic beliefs is that alpha beta separation is a risk management function and that if investment risks are managed intelligently and prudently, appropriate returns will be the result. Integra’s approach is clearly resonating with our perceived market as we have added $470 million of assets in these strategies in less than two years.

Many of our strategies are offered through pooled funds. Implementing alpha beta separation strategies often involve complexities the average investor does not have the time, inclination or experience to embrace.  Pooled funds, being turnkey solutions, look after the complexities of ISDAs, prime broker relationships, portfolio rebalancing and due diligence very efficiently without the investor having to concern itself with the details.  Portfolio valuation to the investor provides a simple unit value that is marked to market monthly.

Integra’s alpha beta strategies can be portrayed in several categories:

Portable Alpha
Portable alpha includes Liability Driven Investing (LDI) programs.  In a LDI structure, the beta is typically a fixed income index like the DEX Universe Index accessed through a swap.  Alpha sources are diversified and the product is offered through a pooled structure. Other portable alpha programs use global fixed income and equity alpha sources in market neutral and short extension constructs.

Short Extension
Short extension is the limited use of short positions in a long portfolio to enhance the alpha earning opportunities of the portfolio.  It is a benchmarked strategy with a beta of one linked to the desired benchmark.  Often the strategy is expressed as a 130/30 construct.  Integra offers short extension strategies in pooled vehicles for bonds, US equities and global equities.

Alpha Strategies
Integra’s alpha strategies are available either stand alone or in Funds of Funds. Hallmarks of Integra’s strategies are their managed account structure, weekly liquidity, no lock ups or gating and full transparency. Operational and investments risks are greatly minimized with the use of the managed account structure. Over 150 different hedge funds are available in this manner.

Hedging Strategies
Integra’s hedging strategies include the familiar currency hedging to the very innovative benchmark hedging process developed by Professors Harry Kat and Helder Palaro.  In the latter, a plan sponsor hedges its benchmark with a zero correlated synthetic overlay that significantly reduces overall fund risk.  The extra capacity it creates in the risk budget can be spent to further enhance the return of the fund, if desired.

Another of Integra’s beliefs is that alpha beta strategies are an important pathway to the future of modern investment management.  We are uniquely positioned to employ the best of what the global asset management community has to offer and to provide those strategies to our clients in clean, efficient investment structures.

Integra-Pushing the Efficient Frontier