Alpha and beta separation. Reading 27 index, capable, position, japanese, long

amqata

On page 238 of the cfa book, using futures instead of long/short to port alpha, the books says that one has to short futures on the manager of the japanese index and take a long position on the s and p. this sounds a bit counter intuitive. Wouldnt we want to be long the japanese managers alpha since it says that the manager is a capable one? Or am i assuming too much with the word “capable”

Matori

This makes more sense. Thank you all for the replies.

svgleeson

This makes more sense. Thank you all for the replies.

stockjaguar

he wants S&P 500 exposure. So he would be long s&p 500 futures and would then short the Topix Index futures for the active return. and he is explicitly forbidden from investing long/short.
the short futures position would be considered a hedge and not explicity seen as a violation of the short constraint.