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Optima Fund Management – Best Multi-Strategy Fund of Hedge Funds

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It’s fair to say that Optima Fund Management has seen a lot of change in the hedge fund industry, given that it is preparing to celebrate its 30th anniversary.

Since Dixon Boardman founded the New York-based firm in 1988, it has steered a steady course. It has continued to evolve in line with market trends so as to unearth the best hedge fund talent, which feature in a range of multi-manager funds, the first of which, a long/short equity FoFs, has been running since the year of Optima’s inception.

“Despite all the changes in the industry, Optima’s success is based on some important common denominators,” says Thomas Gimbel (pictured), partner and Chief Portfolio Risk Officer. “First, we stick with the fundamentals that drive performance. Second, we avoid undue risk exposure, and third, we make strategic adjustments when it makes sense to do so.”

Innovation is one of the key pillars on which Optima has built its business.

“We’ve been innovative in some of the FoHFs we’ve put together. For example, our global macro fund was one of the first of its strategy to ever launch, and our multi-manager strategy, which launched in 2007 to invest in the “best ideas” of a select group of hedge fund managers, was well ahead of its time,” says Gimbel.

Asked to describe the culture that Boardman has instilled at Optima, he adds:

“It is quality-obsessed, risk averse and innovative. It’s unique. We have looked at other firms to potentially acquire and typically have failed to find a culture fit. What has been created at Optima is a business with the highest quality standards and a commitment to both risk management and innovation.

“It’s about sticking to your core principals, maintaining the standards, and never growing complacent. While we look to the future and always look to make enhancements, we never do so at the expense of our core principals.”

As one would expect at a FoHF firm, investment research is a fundamental skill-set that Optima’s team has built over the decades. Like an apex predator, Optima always looks forwards, never backwards. Just because a manager has had a good run of returns for one, two, three years, there is no guarantee he will remain a staple of the portfolio.

Commenting on the market environment, Michael Spelman, the CIO at Optima, sees the confluence of three key themes that are shaping the investing landscape as we head into the spring of 2018.

The first key theme is Policy Regime Change, manifesting in three ways: first, with “QE” gradually transitioning to “QT”. Second, with a US tax overhaul heralding the end of fiscal austerity and the return to big budgets; and third, the move from globalisation towards selective protectionism and economic nationalism.

“The Second key theme is Economic Reflation, and with 2018 shaping up to be another improving year for global growth, we are witnessing falling unemployment, rising leading indicators, stronger readings of sentiment, and central bankers that are moving at different speeds, but generally away from easy money policies.

“The Third key theme is Asset Rotation. At the asset class level we see more prominent Duration risk as rates head higher, and more prominent credit risk as financing costs increase.”

On winning this year’s award, Gimbel concludes that it is gratifying for Optima to be recognised by Hedgeweek: “Hedgeweek’s analysis is rigorous, objective and intellectually honest which is of central importance to the industry. The most gratifying reward for Optima will always be the satisfaction of our investors as a result of good performance.” 

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