(Harvest) Investors are increasing allocations to focused strategies, or investment strategies consisting of approximately 50 or fewer securities. Focused strategies make up 20%–30% of total active equity assets among the 75 institutional investors and intermediary fund platforms participating in a recent Greenwich Associates study. Fifty-six percent of these institutional investors have increased allocations to focused strategies over the past 12–18 months, and 30% of intermediaries have increased their recommendations of focused equity strategies over the past 18 months.
Driving this growth is the pressing need for alpha among investors who are: 1) relying on market outperformance to meet their long-term goals and funding needs, and 2) allocating growing shares of their investment portfolios to passive strategies designed to deliver low-cost beta.
