Since Lyxor Asset Management was established in 1998 it has grown into one of the industry’s largest managed account platforms with over USD12billion in AuM. Manager selection is key to the success of the business model. Managers must pass a series of rigorous reviews conducted by Lyxor’s investment, operational risk and market risk teams. There are currently around 80 managers on the commingled platform.
In the early years Lyxor had primarily retail clients, yet today institutions account for approximately 75 per cent of the firm’s assets. These include large US public pension plans such as CalSTRS, which appointed Lyxor to serve as its hedge fund advisor. To tap in to the growing allocation to hedge funds among US institutions Lyxor has been actively building its reputation out of its New York office.
As Michael Bernstein (pictured), Managing Director and Head of North American Business Development explains: “Last year was about expanding our client-facing business in North America. We added a number of senior relationship managers to the team. We have a five-person strong team working with clients as well as a full complement of marketing and client service people. Nathanael Benzaken, who has held many senior roles including running the managed account platform, will shortly be moving to New York to become our US CEO.”
Bernstein and his team focus on the asset raising side of the business. Last year was the best to date with Bernstein confirming that assets grew by more than 100 per cent: “2013 was an outstanding year from an asset raising perspective in North America.”
In terms of where those inflows are originating from investor interest in the Lyxor MAP is quite diverse: not only is it large US pension funds wishing to set up their own platforms, but it is also asset managers running multi-manager portfolios who favour liquid hedge funds and private banking groups looking to offer innovative alternative strategies to their clients.
“We’ve tried to build a team to focus on these different market segments in the US because each has its own particular needs,” says Bernstein.
Lyxor has made a concerted effort to be seen as a global, not just a French, institution. As more US clients come on board, this is helping to foster acceptance within the wider investor community, which in turn helps Lyxor maintain a competitive advantage over its peers.
“It’s an ongoing process. We’ve been actively marketing here for the last five or six years now. I think our brand is much better known than it was a few years ago.
“We’ve worked with hundreds of managers and we’ve proved to be a reliable partner, particularly through 2008 when our experience really came into prominence; we didn’t have any liquidity problems with our commingled managed accounts. Also, for many hedge fund managers and investors, they want to know that we have the backing of a global bank, which we have with Societe Generale; it’s an important consideration,” says Bernstein.
The transparency and independent risk oversight that Lyxor brings to bear gives investors a lot of reassurance, especially public pension funds who are, by nature, risk averse. “Adoption of managed accounts among public pensions was one of the biggest trends we saw last year,” confirms Bernstein.
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