ADDDing Value

The RG Lab is our engine. We follow a 4 step process to transform ideas into feasible, performing products.

Analyse

Source of 'Alpha'

RG helps institutional investors generate uncorrelated, absolute returns to hedge their portfolios against the risk of dislocation in mainstream asset classes. We do this by identifying the exceptional breed of alpha-generating fund managers, through our proprietary framework for product conceptualization, creation and distribution.

  • At RG Lab, our intellectual capital hub, we research the global investing landscape – spanning a whole host of asset classes, products, strategies, etc. – every day, to come up with unique themes or ideas to generate true alpha.
  • We tap into our extensive partner network of asset management firms to identify those who are already running strategies based on similar ideas, or are open to co-creating new products along with us.
  • We go the last mile by distributing our products through a wide range of intermediaries across the financial services ecosystem, to sell or market these investment funds to investors seeking True Alpha.

5 criteria to deliver True Alpha

The skill to deliver uncorrelated, absolute returns on a risk-adjusted basis – and that too, on a sustainable, repeatable basis – is rare. And such outperformance requires superior skills in terms of actively selecting investment assets/securities that are distinct from the market. In order to identify investment managers with a proven track record of delivering alpha, we apply five filters/criteria:

Dynamic Due Diligence Marker (D3M)

D3M is a proprietary, algorithm-driven risk-based scoring system designed to advance due diligence for alternative investments. It employs a dynamic framework, updating risk scores monthly using current market and fund-specific data.

The system is structured around eight core pillars, collectively assessed with 150 parameters that integrate both quantitative factors and qualitative factors, which are quantitized for objective analysis. This architecture enables systematic, ongoing monitoring; if a fund’s D3M Score consistently declines, it is placed on a watch-list for further analysis, ensuring adaptive, data-driven decisions.

  • Performance

  • Consistency

  • Liquidity

  • Risk

  • Airbag Quotient

  • Portfolio Fit

  • Process & Controls

  • Financials

Design

One of the biggest challenges today is finding the right product structure for strategies & ideas. Given the fiercely competitive eco-system, high investor expectation and complex tax and regulatory environments, the old playbooks just don’t hold good. At RG, we look at various commercial and legal angles, to make the fund structure tax efficient, cost effective, flexible, familiar to investors and robust, thereby enhancing its marketability and performance.

The following are key factors in our Fund creation process

  • Fund Domicile

  • Investor Objective

  • Regulatory landscape

  • Fund eco-system

  • Fee structuring

  • Risk Management procedures

  • Client reporting

  • Risk & compliance procedures

Distribution

We reach and distribute products to institutional and regional players of scale across Greater China, North Asia, South East Asia, India, Europe and MENA region.

Skill

Human skill and judgement, we believe, still matters in the world of asset management, particularly in the context of True Alpha – the continuing commoditization of several investment products, categories, etc. amid the “passive wave” notwithstanding.

Beyond the publicly available and discussed investment ideas and narratives, there are numerous, “under the radar”, niche themes that offer superior return streams on a risk- adjusted basis.This is the white space we, at Rostrum Grand, focus on. We identify those less talked about, non-glamorous asset managers who bring unique skill sets and competitive advantage vis-à-vis their area of specialization, and focus exclusively on harnessing the same to deliver True Alpha for their clients.

Inaccessible Risk Premium

We consider inaccessible risk premium to be a gateway to unlocking True Alpha, and look at the underlying return streams which are generally inaccessible to most investor types due to regulatory constraints and other structural factors. Such opportunities require deep expertise and active management in order to extract returns, quantify risk and provide dependable returns.

Alternative Beta

At RG, we identify managers running niche alternative beta strategies whose returns are structured around either non-traditional benchmarks and risks, or around alternative investment assets which track alternative indexes. Our comprehensive coverage of various hedge fund categories allows investors to leverage alternative beta effectively, and generate True Alpha.

Inefficient Markets

Market inefficiencies have existed, do exist, and will continue to exist – irrespective of human beings or algorithms making the investment or trading decisions.These inefficiencies can arise due to several reasons, including information asymmetry. Many times, certain valuable information that can significantly influence the price or risk of a tradeable asset is not transparently available – thereby creating an opportunity for managers who have access to that data to generate True Alpha.

Institutional Asset Management

Among the many lessons the 2008 financial crisis taught investors is the need to mitigate counterparty risk. It is our firm belief that the best, sustainable investment management capabilities are institutional, and not individual, in nature. Fund houses having decades-long track records, experience of navigating multiple market and economic cycles, a long-term, consistent audit record, regulatory framework etc. are the ones we prefer.We look for best- in-class asset managers with institutional expertise, significant assets under management, risk management capabilities, and most importantly, intellectual capital.

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