2011 saw a total of 28 new funds join the industry’s largest individual commingled managed account platform across a range of strategies including multi-strategy, special situations, merger arbitrage, emerging market LSE, global macro and long/short credit.
And this year is proving no different. Two managers in the fixed income and global macro space have been onboarded: Concordia Advisors, the New York-based fixed income relative value fund (added February), and Bladex, a Latin American global macro manager (added March).
As of May 29, 2012 the AUM for the MAP stood at USD11billion.
Stefan Keller, Head of MAP Research at Lyxor, says that despite a difficult environment, hedge funds on the platform have still managed to perform.
Says Keller: “Hedge funds on the Lyxor platform are up 1.08 per cent YTD and the Lyxor Hedge Fund Index as of May 29 was in positive territory in all but one investment strategy – basically 12 out of 13 strategies have been delivering positive performance to investors in 2012.”
And as Keller is keen to stress, the Lyxor Hedge Fund Index is an investable index based on live funds trading on the MAP; not a theoretical construction.
Three themes are emerging this year in Keller’s opinion. Firstly, like in 2011, it remains a risk on/risk off environment. This ties in to the second trend, namely that pure equity strategies are somewhat out of favour with investors. “We see this also in the risk budget allocated by CTAs or global macro managers to equities: trend followers are keen to allocate more risk to FX, interest rates and bonds,” observes Keller.
“The third trend is that long/short credit, CB arbitrage, fixed income arbitrage, and even event-driven strategies which have a credit element in their portfolio, are all enjoying nice inflows this year and are also ranking in the top tier with respect to performance YTD.
As of May 29, the best performing strategy is fixed income arbitrage, up 5.06 per cent, followed by distressed strategies, which are up 3.58 per cent,” says Keller.
One of the key strengths of Lyxor’s MAP is that it uses an open-architecture business model; an important feature when counterparty risk is top of investors’ minds. It uses 11 prime brokers, three independent fund administrators and 15 authorised OTC counterparties. In volatile markets, this rigorous approach equates to better protection of clients’ capital.
Transparency is another central pillar of the MAP. Whilst risk aggregation has become de rigueur since 2008, Lyxor has been doing it since 1998.
“We’ve developed our own internal way of measuring risk across all internal managers. A team of more than 20 risk analysts lie behind the Panorama risk engine, which as its name implies offers a panoramic view of portfolio risk. This all ends up in our secured website which allows investors to see a homogenous picture of risk in all our client holdings,” says Keller.
One exciting development is a heat map, which highlights concentrations in each fund by asset class, currency, country exposure etc, giving investors a visual representation of risk. “Many of our investors have acquired an immediate addiction to this powerful analytical tool. It shows that our platform is leading the way to help investors make better informed investment decisions.”
On winning the award, Keller says: “We are particularly proud to have won this US award for the first time and feel happy that Hedgeweek readers in the US appreciate our value proposition. This award reflects our strategic objective of having a better footprint in the US and will undoubtedly help us consolidate our market leader position.”