Thu, 17/04/2014 - 14:30
Geneva-based Unigestion has been investing in hedge funds for over 25 years and has seen investor attitudes change substantially over that time. The dominance of institutional money flooding into alternatives is well documented. But whilst fund-of-hedge fund firms appear to have responded quickly to the demand for tailored, segregated solutions, in many cases this has become an oversold and non-personalised process with products pushed into firms’ distribution networks.
Unigestion, however, has worked hard to drive this tailored mandate-driven approach to the next level by adapting its investment process to the needs of each client.
“We deliver a standard of quality based on strong investment principles to all our clients even if the end result for each client is different,” explains Nicolas Rousselet (pictured), Managing Director and Head of Hedge Funds at Unigestion.
“We spend a lot of time talking with our clients to really understand their objectives and effectively design their investment solution with them. We’re an investment partner at the end of the day; a facilitator in hedge fund investing.”
Rousselet cites four principles of segregated mandates that work in investors’ favour: engagement (with the client and with the underlying managers), transparency, ownership and alignment. The majority of Unigestion’s clients avail of a ‘fund-of-one’ structure with Rousselet noting that “right now the institutional world is more biased towards owning not sharing”.
The fund-of-one provides an efficient legal structure for institutions where they alone are the sole investor. This helps to remove ‘commingled’ risk where the actions of other investors in commingled products can adversely influence their performance.
“At Unigestion we have an umbrella structure. If a client wants a rapid set-up they can benefit from economies of scale where we help them design a fund-of-one to sit under the umbrella. They benefit from full administration, custody, segregation; all the advantages of investing in a fund but without commingled risk. Also, we can work within any jurisdiction the client prefers; if they want a Belgium fund we can do it, a German fund, we can do it.
“Most clients choose to use our umbrella as it’s the simplest, fastest and sometimes cheapest option,” confirms Rousselet.
One example of how Unigestion is working creatively to support investment opportunities for clients is with respect to emerging managers; younger managers with one to two-year track records and who represent an exciting diversifier for large experienced institutional investors looking to spice up their alternative investments.
Rather than simply create a multi-manager fund product, Unigestion is looking to develop a nursery-type arrangement to give investors the opportunity to invest in young funds to capture potential outperformance while they grow.
“Either the fund, once it gets big enough, moves into their overall portfolio or they can simply recycle their assets into new opportunities. It’s interesting for institutional investors who have a long-term commitment to investing in hedge fund managers. They need to move fast to invest in these young managers and Unigestion can help set up this investment process. We are still in the discussion stage right now.”
Having that ability to work with investors as partners, to absorb them into the overall investment process, is an inclusive approach few can claim to offer. As the fund-of-hedge-fund model tries to evolve, Unigestion is sticking to its core beliefs. And that has to be applauded.
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