The measurable value-add for any allocator or fund of funds manager is the ability to consistently identify and invest in alpha-generating managers and therefore to predict fund outperformance.

Using privateMetrics® to estimate total alpha and alpha persistence scores as of year-end 2018, a new report from Scientific Infra & Private Assets (SIPA), “Picking Winners,” finds a clear pattern: managers with the strongest persistence scores were much more likely to generate alpha in subsequent vintages (2019–2023), while those with weak alpha persistence scores were more likely to underperform.

Backing managers with high persistence scores increased the odds of achieving future alpha—2:1 versus a coin-flip 1:1—compared with just 1:2 odds for managers with low persistence. This is not a subtle edge; it’s the equivalent of playing with home-court advantage in the NBA, where home teams win more than 60% of the time.