Peter Hecht – Portable Alpha: Solving the Funding Problem of Alternatives (S7E31)
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Hey, everyone. Corey Hofstein here. Before we get started, if you're into capital efficiency and smarter portfolio construction, mark your calendar. The second annual return stacking symposium is coming to Chicago on 10/28/2026, headlined by Cliff Asness, founder and CIO of AQR. It's a full day of conversations on how to stack return streams, put your capital to work more efficiently, and rethink the way you build portfolios. Whether you're an advisor, allocator, or just curious about return stacking, this is the room to be in. Head to www.returnstacked.com/symposium to learn more and grab you
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Alright. Three, two, one. Let's jam. Hello, and welcome, everyone. I'm Corey Hofstein, and this is flirting with models, the podcast that pulls back the curtain to discover the human factor behind the quantitative strategy.
Corey Hofstein is the cofounder and chief investment officer of Newfound Research. Due to industry regulations, he will not discuss any of Newfound Research's funds on this podcast. All opinions expressed by podcast participants are solely their own opinion and do not reflect the opinion of Newfound Research. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Newfound Research may maintain positions and securities discussed in this podcast. For more information, visit thinknewfound.com.
My guest this episode is Peter Heck, co head of the North America Portfolio Solutions Group at AQR. Portable Alpha is drawing serious attention right now. Along the province of large institutions, it's now being wrapped into mutual funds and ETFs, which means for the first time, advisors and the individual investors they serve get a seat at the table. So I wanted to sit down with someone who's been thinking about the idea for almost two decades. We start with the basics, what portable alpha actually is, and why Peter insists the core concept is funding, not leverage. From there, we work throug
It's great to be here. Looking forward to the conversation.
Now you co lead the North America Portfolio Solutions Group at AQR and this is a role that by its name is really about solving portfolio problems for clients rather than running any particular specific strategy. As you look at the landscape today, what's the problem that you are spending the majority of your time on now?
So I would say most investors are celebrating the past because equities have crushed it. They've hit their return targets, but they're looking at where valuations are and they're like, Beta isn't going to allow me to hit my return targets over the next decade. What can I do? And then the second thing is, hey, there's a lot of macro volatility out there and most of these folks are long only and they know macro volatility can be feast or famine. So they're like, I need more returns because beta is not going to do it. There's a lot of macro evolves, so I need these diversifying return sources and
So as we mentioned right from the get go, this is a category of solutions that has been getting a lot of attention lately. Post 2008, it was persona non grata all of a sudden in the 2020s, it seems to be everywhere both in the institutional side but also a growing interest in adoption in the wealth side. I mean Morningstar for example just created a whole new category for funds that have been launching that implement portable elephant and what we call return stacking concepts. Before we go further, I do want to just ground the audience, right? Because I don't want to make the assumption everyo
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