European pension funds have given African pension funds advice on how to use beta effectively in a pension fund portfolio.
Ville Helske, head of allocation and alternative investments at Ilmarinen, told the conference the purpose of an alternative beta portfolio was to invest in alternative risk premiums.
Helske said: "The portfolio is long risk and should have correlation benefits with equity and fixed income portfolios.
"Exposure to different risk premiums varies with time and with opportunities in the marketplace," he added.
He outlined the wide range of different exposures, including liquidity risk, commodity term structure and volatility.
Helske said the easiest way to access risk premiums was to invest in hedge funds. However, He noted that some risk premiums were relatively easy to capture and funds should look into investing in them internally.
Dr. Jelle Beenen, head of alternative beta, PGGM Investments, explained how the Dutch fund had allocated to alternative beta and how to achieve strategic investment goals through a portfolio of strategies.
Beenen said enhanced beta achieved through systematic strategies should amplify the desired risks and neutralise unwanted risks.
"Risk reduction by diversification provides stable returns," he said.
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