Alternative risk premia

April 2023

This primer describes the investment strategy commonly known as Alternative Risk Premia. It provides an overview of and answers the types of questions institutional investors would be likely to ask when considering an investment in this area.

Alternative Risk Premia (“ARP”) strategies invest in non-traditional risk premia. That is, rather than investing in stocks, bonds, or other assets that generate their returns from traditional betas, ARP strategies are designed to benefit from alternative betas such as value, momentum, and carry. Because they are designed to be void of traditional risk premia, their returns should be uncorrelated with the movements of global capital markets. Theoretically, this makes ARP strategies a potentially valuable diversifier.