Alpha represents different concepts in physics, chemistry, mathematics, zoology – and even in finance. In the financial world, alpha represents the value a portfolio manager adds to or subtracts from an account’s return above the market, measured by commonly used benchmarks, such as the S&P 500 index.
Alpha is the pillar of FIS Group, Inc.

“Alpha is an important source of investors’ returns,” FIS Group CEO, CIO and founder Tina Byles Williams, explained to The Suit. “It is a necessary component in helping investors meet their investment objectives. Yet alpha is a scarce and often illusive commodity. Moreover, the more smart people you have chasing it, the more arbitraged away and diminished it becomes.”
To be sure, the search for a competent and successful money manager should always focus on alpha.

Byles Williams began FIS Group, an asset management and investment advisory firm that aims to produce alpha for its clients, in 1996. Capitalized with $150,000 that was a second mortgage on her home, Byles Williams effectively grew the Philadelphia firm, adding clients, assets under management and employees. “Today we manage several billions for our diverse institutional client base,” Byles Williams explained.

As with most things in life, risk and reward go hand in hand. The greater the potential reward, the greater the risks that need to be undertaken. The best investment managers, like Byles Williams, use their experience and skills to profit from management strategies or assets whose risks are mispriced and whose opportunities are misunderstood.  Examples of such strategies include frontier markets as well smaller, experienced and highly talented entrepreneurial investment management firms.

FIS Group specializes in offering emerging strategies to public funds, corporations, endowments and foundations, with products tailored to specifically suit each client's needs and mandates. Strategies are built around navigating domestic, global, emerging and frontier markets, as well as sectors.

The firm also uses the more usual investment vehicles like exchange traded funds (ETFs) and U.S. equities, but Byles Williams sees great potential in global markets. “Currently, half of our assets are invested in non-U.S. equities, including small caps, emerging and frontier markets,” Byles Williams detailed. She is especially keen on frontier markets, which represent some of the world’s less developed capital markets in countries such as Croatia, Tunisia, Vietnam, Kenya and Mozambique.

According to Byles Williams, "Frontier markets, represent some of the fastest growing economies, whose companies (as measured by the constituent companies in global stock indices) are reasonably valued but generate higher dividends and profit margins than companies in either developed or emerging countries."  Companies in  frontier markets consist chiefly of stocks from those financial, telecommunications and consumer companies. Over the last two decades, investments in frontier markets have become increasingly relevant to the global economy, rising six-fold. While these countries do not as a whole offer the highly evolved governance structures and capital markets as developed markets such as the U.S., Byles Williams stated that "investors’ perceptions of the riskiness of these markets typically exceeds reality and does not sufficiently differentiate among what is in fact a considerable variance in governance structures and risks."

Another area of misunderstood risks and opportunity is the perceived riskiness of smaller investment management boutiques vs. the big wirehouse firms. Research by FIS Group and various academics suggest that the skilled investors increase their probability of generating alpha net of their management fees through high conviction portfolios whose holdings vary considerable from common market benchmarks, such as the S&P 500 index. Byles Williams says her firm focuses on smaller entrepreneurial firms that offer such portfolios "because our research and experience suggests that as investment managers increase the size of their portfolios beyond certain asset thresholds, they are unable to trade as nimbly, their holdings become more benchmark-like and their alpha diminishes."

Byles Williams did take a lighter tone when asked about her greatest successes. Without skipping a beat, she said with a loving motherly undertone, that her greatest success has been in raising two good sons. Professionally, she added, success has meant building her company into a successful and premier investment advisory firm.

On a more serious note, Byles Williams says that she and her firm are also proud of their successes in improving their community. Among the charitable community initiatives launched by FIS Group are: the FIS Group Financial Literacy Program designed to help increase the financial literacy of students in low income areas and life and leadership programs focused on girls and women from less privileged backgrounds.  As Byles Williams emphasizes, “We’ve all done well. We’re in a position to give back and we do. It’s important to all of us.”

For more information, visit: www.fisgroup.com