From The Tabb Group via Securities Industries News and FT Alphaville:
...Despite its popularity in the modern market lexicon, there is no such thing as “alpha generation.” Investment managers and hedge funds do not produce alpha —as if it were the proverbial special sauce. Alpha is indirectly generated: It is a symptom of inefficiencies caused by market structure; inadvertently conflicting regulations and regulatory regimes; information distribution and cognitive disparities; and naturally occurring anomalies and behaviors among various types of competing market participants....The report goes on to say:
...Quantitative research is nothing more than a highly systematic approach to pattern recognition, and quantitative trading is simply the application of automation to the detection of these patterns. To translate this axiom into the overused concept of “alpha”—or risk-adjusted returns in excess of a benchmark—quantitative research is another term for alpha discovery, and quantitative trading—itself a euphemism for many other activities, such as algorithmic trading—is another term for alpha capture....The links are at FTA's post "Dawn of the investment assembly line".