Efficacy of alpha strategies called into question

Winner takes all, as margins on alpha strategies squeezed

There is no easy way to define alpha, but that has not stopped some banks offering investors guaranteed alpha returns. "It is possible to capture alpha, but to guarantee it means you are guaranteeing outperformance, which may work in theory but will not work in practice," says Kemal Bagci, director of equity derivatives and structured retail at Royal Bank of Scotland in Frankfurt.

Traditionally, alpha has been explained as the excess return of a strategy after taking into account market risk. Al

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