Gottex Fund Management’s core hedge fund strategies and solutions business is to focus on offering bespoke and specialised hedge fund products and solutions to institutional clients around the world in 2013.
The firm intends to expand its product offerings and capabilities both organically and non-organically in the coming year.
In terms of strategic growth initiatives for 2013, Gottex intends to grow its multi asset offering and capabilities in Europe and Asia on the back of its record of positive investment performance.
The firm will further develop its growing Asian business as the gateway between non-APAC based investors seeking to access Asian investment opportunities by leveraging its knowledge of Asian markets and investments, while offering outbound services to APAC based investors seeking global diversification in their portfolios.
For its LUMA managed account platform, the firm will seek to form partnerships with asset owners to provide specific platform solutions and bring further scale to this business.
Performance in Gottex’s core market neutral products continues to generate positive returns year to date and meaningful outperformance of their benchmarks. The firm’s flagship market neutral product and related separately-managed accounts are above their high water marks and are accruing incentive fees. In addition, three of Gottex’s hedge fund products have generated in excess of 10 per cent year to date while the hedge fund benchmarks are around four per cent year to date, including the firm’s US equity Portable Alpha strategy (+18.3 per cent YTD), Asia Opportunity strategy (+12 per cent YTD) and the Alternative Credit strategy (+10 per cent YTD).
In terms of capital flows, similar to the majority of the fund of hedge funds industry, Gottex continues to face headwinds as a substantial number of large institutional investors develop their own capabilities. Although the firm has successfully been awarded mandates in excess of USD125m in the fourth quarter, one of its investors will terminate a USD525m relative-value and event-driven segregated managed account as of January 2013. Other client redemptions are within the company’s historical range. Within the firm’s multi-asset business, Gottex has secured a distribution partnership with one of the largest US brokers, for the Gottex Multi-Asset Endowment Fund, a US registered fund.
Based on current operating conditions and steps taken by the company earlier this year, Gottex expects the second half of the current financial year to show a meaningful improvement to the first half, with an expected return to operational cash profitability, notwithstanding an operational loss on an accounting basis, both subject to final review. The firm continues to have a strong balance sheet with no debt and cash and liquid financial investments of USD35m as at 30 June 2012.
Joachim Gottschalk, chairman and chief executive, says: “2012 is likely to end up being a fairly modest year for hedge fund performance for much of the industry, on the back of uncertain markets during the 2H of 2012. However, we believe that global economies will continue to recover. We expect risk markets will stabilise in 2013 once the quarrels of the fiscal cliff are behind us, Europe slowly finds a more stable environment as well as the new Chinese government being fully functional. Asset flows to our industry will remain muted until absolute and/or relative returns improve.
“However, with equity markets now fairly valued and bond yields at their historical low, we expect bond holders to decrease their holdings in favour of alternative investment strategies and bespoke hedge fund portfolios in the coming years. The last few years have been challenging for the fund of fund industry but I am pleased with the progress we have made in adapting our core business and launching our growth initiatives. Finally the strong outperformance of our hedge fund products puts us in a good position to capture future asset flows.”