![[i3] Investment Strategy Forum | Investment Innovation Institute](https://i3-invest.com/wp-content/uploads/2024/09/i3-Investment-Strategy-Forum-2025_SlideShow_noMashead_Standard2-538x430.jpg)
In the vast financial savanna, institutional investors are often seen as dominant players, much like lions in the wild. But when it comes to the search for alpha – the elusive measure of market-beating return – investors might be better compared to another often-underestimated predator: the hyena.
Despite being portrayed as mere scavengers, hyenas are some of the most intelligent and strategic predators in the animal kingdom, capable of coordinating complex hunts, reading environmental signals and adapting quickly to shifting conditions.
Alpha: The Scarce and Misunderstood Prize
Alpha in investing represents the ability to outperform the market on a risk-adjusted basis. However, much like the hyena’s reputation as a mere scavenger, the pursuit of alpha is often misunderstood.
Many investors assume alpha simply means picking the right investments to beat the market, which is not incorrect but potentially naïve. In reality, it also encompasses identifying inefficiencies, leveraging technology and managing risk judiciously. More broadly, sources of alpha can also be framed in terms of
- Investment markets
- Portfolio construction, capital allocation and liquidity management
- Business strategy, structure and organisational governance
Extracting Meaningful Alpha at Scale
When viewed solely through the lens of investment markets, alpha can be an evolving and diminishing resource, eroded by market competition and efficiency over time. However, framing it in a portfolio strategy and organisational context enhances the prospect for sustainable long-term returns.
Size matters too, given the burgeoning growth of Australian superannuation funds. Is that an advantage or burden?
Like a hyena pack coordinating to take down prey, institutions have access to vast research networks, capital, and expertise. The best institutional investors embrace collaboration, technology, and data-driven strategies – using every tool at their disposal to stay ahead.
But their scale also means they cannot always pursue the nimble, high-reward opportunities that smaller competitors can.
Returns for the Long Term
Hyenas thrive because they adapt, work together, and know when to strike and when to wait. For institutional investors, the hunt for alpha is no longer just about excessive risk-taking – it’s about leveraging intelligence, agility, and patience.
For the discerning investor to thrive in an ever-changing financial ecosystem, it pays to heed the call (or laugh?) of the hyena, recognising that alpha is fleeting, competition is fierce, and survival depends on adaptation.
We look forward to a robust and meaningful discussion at the 13th annual [i3] Investment Strategy Forum for chief investment officers, allocators, portfolio strategists and trustee/investment committee executives.
Enquire about this event
