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Developing a new ‘multi-manager’ MAP solution

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Lyxor Asset Management has developed another innovative solution for investors to allocate to liquid alternatives in a cost-effective fashion. In addition to offering commingled and segregated managed account solutions for hedge fund investing on the Lyxor MAP, investors can now avail of a multi-manager managed account solution, which, structurally speaking, is similar to the multi-manager '40 Act alternative mutual fund springing up in the US. 

As Daniele Spada (pictured), Head of Lyxor MAP, explains, the solution answers the needs of investors who want diversified exposure to a particular investment theme without investing in a fund-of-funds, which will typically contain a slew of funds to provide single strategy exposure.

"That's a key difference to a normal single manager mandate," says Spada. "We've received a lot of requests, particularly from private and wealth management clients, for diversification solutions to their long equities and fixed income exposures. What they are asking for is a performing solution with contained volatility, limited correlation to traditional assets, flexible allocation to different alternative strategies and cost efficient; and that's where we came up with the idea of having one UCITS multi-manager managed account containing a selected group of managers."

The advantage of this arrangement is not only that it answers the diversification needs of the client, it also offers greater flexibility and cost-efficiency compared to a traditional fund-of-funds. With a single managed account, managed by a group of selected managers, it is easier to reduce or increase exposure to a specific strategy without bearing all the administrative costs and the timeframe of creating a new fund mandate every time. 

"You can close or reduce exposure to a strategy altogether, which is much easier than closing a fund and adding a new one," says Spada. "Most of the requests we are getting for this multi-manager solution are coming from wealth advisors who like this cost-effective solution. When we speak to managers about running a daily liquidity version of the strategy, we tend to focus on good names who are already running liquid strategies. The challenge is obviously the full replication of their strategy within this multi-manager format."

Currently, Lyxor is working on a multi-manager mandate for external clients and has also commenced work on an internal project, whereby Lyxor will launch a multi-manager managed account fund for its investors. 

"This is a new investment solution to the Lyxor UCITS platform," says Spada. "Both multi-manager solutions will offer daily liquidity." 

Last year, Lyxor was entrusted by the Societe Generale group to provide fund selection services on the long-only universe to its private banking group, opening up a far wider investor audience. 

"We now have 10 analysts covering mutual funds and 20 analysts covering hedge funds. Lyxor has become a real centre for fund research, selection and advisory, both on traditional and hedge funds, beyond our historical expertise in managed accounts.

"The alternative UCITS universe is the result of the convergence between the mutual fund and the hedge fund world. When you build one of these multi-manager managed account solutions, having such a comprehensive expertise on funds is very helpful to pick the best manager for a given strategy. In a multi-manager solution the expertise of a hedge fund manager offering a liquid alternative version of his strategy and the talent of a more traditional long-only manager can co-exist and deliver very good results," concludes Spada

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