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ARTICLE · 26 JANUARY 2026

Hedge Fund Developments: Portable Alpha And SMAs

McDermott Will & Schulte
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While insurance dedicated funds and rated feeders dominated specialized fund formation activity in the hedge funds market throughout 2025, portable alpha strategies are of growing interest.

United StatesFinance and Banking
Peter D. Greene
Peter D. Greene
Daniel F. Hunter
Daniel F. Hunter
David Lifshitz
David Lifshitz
Eileen Overbaugh
Eileen Overbaugh
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Key takeaways

  • Insurance dedicated funds and rated feeders dominated hedge fund formation activity in 2025.
  • There is continued interest in portable alpha strategies that capture both alpha and beta returns.
  • Portable alpha strategies can be structured in several ways, each with different cost and contagion risk implications.
  • Managers must consider different approaches to mitigating fiduciary risks and fee arrangements.
  • SMAs continue to be widely deployed.
  • Liquidity terms, contractual arrangements, expense allocations, and hurdle rates are all focus areas when negotiating SMA solutions.

In Depth

Portable alpha strategies: Legal and structural considerations

While insurance dedicated funds and rated feeders dominated specialized fund formation activity in the hedge funds market throughout 2025, portable alpha strategies are of growing interest. Favored by certain sovereign wealth investors looking for one-stop-shop solutions, they allow investors

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