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The “cash is trash” talk is back as institutional investors’ cash holdings fell to their lowest level since the beginning of August. Markets have swung sharply this year. AI buzz gave way to doubts over AI spending. Rising unemployment rates in the U.S. sparked recession fears, spurring markets to expect rate cuts as deep as in past recessions. Shifting markets may tempt some investors to sit on the sidelines (or flee to less risky investments) as they await further clarity, but the message from Wall Street is clear: not staying invested during uncertainty could risk losing out on bullish trades.

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The USD43 billion Iowa Public Employees’ Retirement System has been growing allocations in its USD250 million alternative risk premia program through systematic bank premia via swaps in recent months. Sriram Lakshminarayanan, chief investment officer at IPERS in Des Moines, said the plan has increased its existing exposures but has not added notable new premia to its ARP program.

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Lombard Odier’s All Roads multi-asset team has been steadily increasing market exposure since the volatility spike in August.

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Morgan Stanley Investment Management’s AIP Hedge Fund Team has identified growth in quantitative equity strategies over the next two quarters as it remains constructive on alpha generation during the latter part of 2024.

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The USD7 billion Boston Retirement System is requesting proposals from investment firms to manage a hedge fund of funds strategy in a multi-strategy fund or funds structure for the pension’s defined benefit, pension fund. BRS’ plan is for the allocation to enhance portfolio diversification, improve risk-adjusted returns and identify managers who have demonstrated expertise in specific strategies, according to the request for proposals. 

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Ian Merrill has joined fintech index provider MerQube’s senior management team as its new chief revenue officer in New York. Merrill, who most recently worked as president and senior managing director at SCG Asset Management, will lead MerQube’s sales efforts and client engagement, while collaborating and informing its research and product development teams on market trends and opportunities to grow the company’s offerings. 

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USD5.7 billion Veritas Pension Insurance Company will be focusing more on systematic, quantitative investment strategies in its alternatives portfolio over the next year. Laura Wickström, chief investment officer, said the company is in the process of planning its investments for the next 12 months and highlighted QIS as an area she is seeing more opportunities to generate alpha moving forward.  

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Guillaume Flamarion, managing director, co-head of the multi-asset group and head of equity derivatives structuring at Citi in New York, said the bank is seeing more interest in hedging and dispersion strategies after a volatile summer period during which many investors had a carry-focused profile. He said with geopolitical and election stress building in the U.S., investors are trying to effectively position their portfolios, leading to dispersion entry points coming into greater focus. 

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Volatility in the U.S. equity options market remains relatively high, and there are a handful of reasons for that besides the U.S. presidential election. Data show the Cboe Volatility Index tends to increase going into October during election years before selling off right before the event, however, this year investors are more concerned about the U.S. economy and interest rate cuts – at least for right now.

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Andreani & Associés, a Geneva-based private investment office focused on alternative investments, launched a systematic macro premia strategy catered to institutional investors, including asset managers and pension funds, on Friday. The strategy uses Societe Generale’s quantitative investment strategies to generate “pure structural alpha” within a market neutral and rules-based framework to attain a diversified portfolio for its clients. 

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