Can pod shops channel ‘organisational alpha’?

The tension between a firm and its managers can drag on returns. So far, there’s no perfect fix

Over 40 years ago – long before the advent of the pod investment model – economist William Sharpe questioned whether multiple managers working in silos could avoid investment choices that would hurt a client at the combined portfolio level.

Sharpe was writing, in 1981, about long-only equity managers, but his question is freshly relevant today for the burgeoning cadre of multi-strategy, multi-manager hedge funds, or pod shops.

Last year, Morgan Stanley estimated roughly one in seven hedge fund