Why LPs Should Pay for Alpha and not Beta

Alpha is the measure of excess returns above market returns, representing the manager's unique skills and value add capabilities. It also measures active returns (vs. passive market returns) and the manger's ability to avoid idiosyncratic risks. Seraya Fund I has the highest Alpha generation of 11.5%, more than 2x of other managers in Asia.

Beta measures market returns. Higher Beta is correlated to higher systemic market risk and volatility. There is no free lunch here! Seraya is a mostly low market risk strategy (OECD developed Asia focused and only selectively emerging market exposure). Hence Seraya's Beta is 8.4%, significantly lower than most managers that are largely exposed to higher risk EM markets to generate higher Beta.

From a true risk-adjusted returns perspective, Seraya's Net IRR 19.8% (8.4% Beta and 11.5% Alpha) represents a differentiated investment opportunity for global LPs.

Source: PEI Scientific Infra & Private Assets privateAlpha (Infra GPs)