Fri, 26/03/2004 - 07:27
In 2002 the two Geneva-based private banks Lombard Odier & Cie and Darier Hentsch & Cie merged to form Lombard Odier Darier Hentsch & Cie. Daniel Penseyres outlines LODH's hedge fund investment strategy.
HW: What was the background to the 2002 merger?
DP: The two banks merged in order to implement a joint development strategy in Switzerland and Europe. The merged bank was launched on 1 July 2002 under the new name Lombard Odier Darier Hentsch & Cie (LODH).
With 21 offices worldwide, the LODH Group is truly international and has teams with significant expertise in all of the world's major financial centres.
HW: How did you deal with the overlap in fund products of the two banks?
DP: As you can understand, a lot of re-organisation took place and as far as themutual funds business was concerned, some funds were merged, others phased out and/or restructured.
HW: What is the size of the hedge funds business at LODH?
DP: We launched our first funds of hedge funds in 1991. As at 1 March 2004, LODH had over USD 3.5 billion allocated to funds of hedge funds and/or hedge funds. Included in this number are USD 1.8 billion allocated to our 9 funds of hedge funds namely the Multiadvisers Fund (registration Luxembourg, Netherlands) and LODH Alternative Strategies (Swiss funds).
We also run an open architecture of external funds of hedge funds as well as advisory services for the clients of the bank.
HW: What are your responsibilities at LODH?
DP: Since 1 January 2003, I have been in charge of the Marketing & Development of the Alternative Investment Strategies (AIS) for the LODH group.
My top priority is to bring to HNWI, financial intermediaries and institutional investors around the world, LODH alternative products, services and our hedge funds selection group's competence. I am currently the main point of contact for all issues and questions related to LODH alternative products and services.
HW: LODH is well-known as a private banker with high net worth investors, how strong is it in the institutional asset management market and what is the profile of these clients?
DP: Since it began in 1796, Lombard Odier Darier Hentsch has become renowned for its experience and expertise with private client asset management.
However, for the past forty years we have also been building up an institutional client base, whose assets today represent an interesting proportion of our assets under management.At LODH we treat each client as unique, and the institutional investor is no exception to the rule. In fact, our organisation is geared to offering customised client services and management solutions.Today, with a strong network of offices in key locations throughout the world, we are in a position to fully service the needs of our international institutional clients. These institutional clients include pension funds, insurance companies, governments, unions, corporations and non-profit organisations.
HW: What is the size of the alternative investment team at LODH?
DP: Excluding the surveillance committee for the Swiss funds, operations, legal and compliance teams, LODH has 11 dedicated professionals in its Alternative Asset Management Groups.
We are organised in the following way, 3 portfolio managers assisted by another 2 analysts identify, select money managers and dynamically manage our 9 funds of hedge funds. 3 professionals are responsible for risk measurements and management. Finally I have another 3 professionals to advise, market and service our range of funds of hedge funds.
Hence, these funds provide both private and institutional investors with a high level of managers and strategies diversification and superior risk adjusted returns.
HW: What are the LODH funds of hedge funds?
DP: The funds are the three LODH Alternative Strategies funds in CHF/USD and Euro versions respectively. Then we have the Multiadvisers US Equity Hedge, Multiadvisers Asia Equity Hedge and Multiadvisers Europe Equity Hedge, the Multiadvisers Global Arbitrage (available in USD and Euro versions), and the Multiadvisers Global Trading (available in USD and Euro versions) as well as our oldest product launched in 1991 currently being restructured.
HW: What are your investment objectives?
DP: LODH is today well recognised in the industry as a "creative solution provider" and our ongoing goal is to better understand and meet our investor's requirements and objectives by:
1. Understanding the hedge fund strategies and risks in which we have invested or will invest.
2. Understanding the ever-increasing complex instruments and strategies used by hedge funds.
3. Having the emphasis on qualitative aspects relative to quantitative variables.
4. Keeping ourselves in the information loop and exercising the highest integrity.
5. Explaining our methodology, and presenting a clear picture of the LODH investment process.
HW: What is your manager selection process?
DP: LODH manager selection and due diligence process is first of a qualitative nature and then uses the modern methods of quantitative measures to assess risks and returns. I often describe our hedge fund selection team members as captive "forensic analysts".
With their non-standard due diligence process they are trying to identify why does a fund make money, how does a fund make money, how much does a fund make for the risks it takes and is the business model, strategy and investment process sustainable over the long term.
This in-depth analysis not only allows us to offer performing funds of hedge funds but also allows us to provide access to outstanding managers, most of them closed to new investors.
HW: How many hedge funds are you currently invested with and how many hedge fund managers does LODH see each year?
DP: We are currently invested with 90 managers with our range of funds of hedge funds. In 2003, after our screening process, we visited "in-situ" about 230 managers around the globe.
HW: What new products/launches can we expect to see from LODH in 2004?
DP: LODH is about to launch a very interesting fund but I will keep it as a surprise for your May issue and Hedgeweek's readers.
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