Boutique or Bazaar? Why alternative strategies may find their creative niche in larger organisations
Trends in the asset management industry are re-shaping the alternatives world.
Investing in Alternatives
Why PGIM for Alternatives?
Bringing together the benefits of global scale and deep asset-class expertise across public and private markets, PGIM seeds, develops and manages a broad range of liquid and illiquid alternative strategies for some of the largest institutional investors globally.
We take a thoughtful approach to allocating to alternative strategies, and aligning these with clients’ investment objectives, risk profiles and liquidity preferences. It is because of this thoughtful, intentional approach, and our unwaivering pursuit of performance, that institutional investors around the world trust PGIM to invest their more than $250 billion across our alternative strategies.1
A GLOBAL LEADER IN ALTERNATIVES
- $250 bntotal alternative assets under management¹
- $162 bnreal estate/infrastructure assets under management²
- $98 bnprivate debt assets under management³
Portfolio-level research across alternative strategies
PGIM’s Institutional Advisory & Solutions (IAS) group conducts bespoke research to help clients select the best mix of public and private assets by quantifying the tradeoff between portfolio horizon returns and liquidity risk. This OASIS™ framework allows clients to incorporate their commitment pacing strategy, fund-level selection skill and views on relative public versus private asset performance. IAS also generates macroeconomic and financial sensitivity analysis (RASA™) for public and private assets, allowing clients to build alternatives portfolios better targeted to their investment objectives.
PGIM Alts Forum: Opportunities In Liquid Strategies
The recent surge in volatility and wide price dispersion in global markets should have provided a favorable scenario for hedge fund strategies, but central bank actions around the world have made price discovery more difficult than ever. It’s with this challenging climate in mind that PGIM brought together a host of experts across a handful of asset classes for our first installment of the PGIM Alts Forum, focusing on the potential benefits of allocating to liquid alternative strategies.
LATEST INSIGHTS
Absolute Return Overlay Solutions: The Best Hope?
QMA's GMS team discusses the potential benefits of portable alpha overlays, which can meaningfully enhance returns over strategic allocations.
Building a Better Portfolio
This paper examines how liquidity measurement and cash flow management is integrated into a multi-asset, multi-period portfolio construction process.
INVESTING IN ALTERNATIVES AT PGIM
Against a backdrop of low-to-negative global interest rates, stubbornly low inflation, weak economic growth, and potentially higher market volatility, institutional investors are looking for alternative sources of return to meet their investment goals.
PGIM Fixed Income offers a suite of alternative strategies that go beyond traditional fixed income. The strategies span a wide array of fixed income sectors, currencies, and derivatives and are designed to meet different risk and return objectives including low correlation to traditional fixed income and/or equities.
The platform ranges from long/short market-neutral relative value strategies that seek to capitalize on dislocations across developed market government bonds and derivatives, to a long/short emerging markets debt strategy, to high-conviction global macro and credit opportunity strategies.
At PGIM Fixed Income, we conduct intense fundamental analysis and utilize quantitative tools and methods to identify top-down macro and interest rate trends, long-term market trends, and short-term, tactical trading opportunities.
Managing downside risk is a key focus. Each portfolio is assigned a risk budget with positioning and stress tests reviewed daily. In total, more than 315 investment professionals averaging 21 years of experience, including 120 fundamental analysts and 61 quantitative research and risk management specialists, support the investment process.5
QMA and QMA Wadhwani (QMAW) offer systematic liquid alternative strategies that seek to outperform consistently over the long run while mitigating downside risk. We utilize proprietary models and optimization methods, and our selective factor exposures are based in economic theory and insights from behavioral finance. We continually seek to improve these processes through ongoing research and model enhancements. Our experienced investment professionals choose from a wide range of instruments to take long and short positions in different countries and asset markets. Offering custom strategic overlay and actively managed options, QMA and QMAW’s alternative strategies are designed to provide diversification benefits through low correlation to traditional assets to help our clients solve their unique investment challenges.
LIFE-IMPROVING HEALTHCARE INNOVATION
Jennison’s Global Healthcare strategy seeks to outperform long-only healthcare approaches over full market cycles by capturing positive return during upcycles and minimizing losses during down cycles. The investment team believes that excess returns can be generated by investing in a concentrated, high-conviction long/short portfolio and that correctly analyzing new product opportunities can identify new growth companies and lead to significant alpha generation. The strategy’s growth investment style focuses on the durability and sustainability of growth rather than on absolute growth rates. Jennison favors biotherapeutic companies with what are viewed as compelling fundamentals and innovative products and pipeline drugs, as disruptive innovation is believed to be the driver of healthcare sector growth.
OUR PLATFORM
As one of the largest real estate managers in the world,6 PGIM Real Estate invests across the global real estate markets to meet the unique needs of investors through a range of real estate solutions across the risk-return spectrum. Our alternative investment expertise spans from the more traditional core, core plus and value-add real estate equity strategies; to investment grade to higher-yield private real estate debt strategies; to niche, specialized strategies including senior housing, impact and agricultural investing.
OUR EXPERIENCE & APPROACH
Our rigorous risk management, seamless execution, and extensive industry insights are backed by a 50-year legacy of investing in commercial real estate, a 140-year history of real estate financing,7 and the deep local expertise of professionals in 32 cities globally.
Through our investment, financing, asset management, and talent management approach, PGIM Real Estate engages in practices that ignite positive environmental and social impact, while pursuing activities that strengthen communities around the world.
PGIM Private Capital is a differentiated alternative credit manager, applying our unique sourcing capabilities and long-term discipline to capture consistent returns. Our global network allows us to penetrate target markets and offer unique deal flow to our investors. PGIM Private Capital’s experienced investment professionals leverage a direct calling approach to build close relationships with sponsors and lenders over time. We access opportunities with companies across the private capital risk spectrum and then use our regional office network to create a diversified portfolio of both sponsored-backed and non-sponsored leverage loans transactions.
In the News
PGIM Private Capital raises $2.23B for sixth mezzanine fund, PGIM Capital Partners VI, L.P.
PGIM Private Capital has completed fundraising for PGIM Capital Partners VI, L.P., surpassing its fundraising target with capital commitments of $2.23 billion.
Structural Inefficiencies and Relative Value Fixed Income
Erik Schiller, CFA, Head of Liquidity, discusses how structural imbalances or dislocations can present opportunities for relative value fixed income investors.
PGIM Real Estate Joins the WiredScore Smart Council
PGIM Real Estate has joined the WiredScore Smart Council, the first dedicated smart building council in the world.
All data (unless otherwise noted) is as of September 30, 2020.
PGIM is the investment management business of Prudential Financial, Inc. (PFI); PFI is the 10th largest investment manager (out of 527 firms surveyed) in terms of global assets under management based on Pensions & Investments’ Top Money Managers list published on 06/01/2020. This ranking represents global assets under management by PFI as of 03/31/2020.
- Alternative assets under management (AUM) by PGIM total $250 billion. PGIM’s alternative AUM includes hedge fund, mezzanine and other private credit, real estate and infrastructure strategies across all PGIM businesses.
- AUM total includes real estate, infrastructure, and energy strategies. Real estate strategies are managed by PGIM Real Estate. PGIM Real Estate’s total AUM is $143 billion and reflected as gross; net AUM is $121 billion; and AUA is $40 billion. Infrastructure and energy strategies are managed by PGIM Private Capital and total $19 billion. Private debt infrastructure and energy strategies are also captured under PGIM’s private debt category and are included in its AUM total.
- Private debt AUM total includes all private debt assets managed by PGIM Private Capital.
- “30 market cycles” represents Prudential Financial, Inc.’s (PFI’s) asset management expertise through PGIM, its affiliates and its predecessors.
- For Professional Investors only. All investments involve risk, including the possible loss of capital. There is no guarantee these objectives will be met. All staffing data as of 9/30/2020. Access additional information, here.
- PGIM Real Estate is the second largest real estate investment manager (out of 99 firms surveyed) in terms of global real estate assets under management based on Pensions & Investments’ Top Real Estate Managers list published October 2020. This ranking represents global real estate assets under management by PGIM Real Estate as of June 30, 2020.
- Includes legacy lending through PGIM’s parent company, PFI.