“Active and dynamic” approach helps Syz Capital-Banca March multi-fund vehicle weather 2020 turbulence

Turbulence

Oyster BM Alternativos – an alternative UCITS fund of funds launched a year ago by SYZ Capital with Spain’s Banca March, and led by hedge fund industry veteran Cédric Vuignier – has weathered 2020’s turbulence to grow its assets to EUR100 million (USD118.1 million), making gains in Japanese and convertible arbitrage-focused positions.

The fund has generated a 3.9 per cent return since its October 2019 launch, and is up 2.5 per cent year-to-date, ahead of its peer group, with roughly half of its EUR100 million inflows received this year.

Oyster BM Alternativos invests in selected equity hedge, event driven, macro and relative value strategies with the aim of providing resilience to market sell-offs.

Vuignier believes the prevailing investment environment makes it tough for investors to achieve diversification with a traditional equities/bonds model, adding clients “will need to find new ways to diversify” towards strategies that better capture volatility resilience and generate alpha.

“We have been positive on Japan since the rollout of corporate governance reforms by former Prime Minister Shinzo Abe. As these regulatory changes feed through to business mentalities, we have chosen a manager capitalising on this evolution, who has returned us more than 20 per cent,” he said of the vehicle’s positioning.

“Another area we have been positive on for the last three years is convertible arbitrage. We have been exposed to this type of strategy, which benefits from rises in volatility and new issuance since launch and this has contributed about 0.85 per cent to our performance. This is one of our largest positions in a concentrated portfolio of 15 funds.”

Launched by Marc Syz in 2018 with the aim of offering private clients access to uncorrelated strategies typically reserved to institutional investors, SYZ Capital now manages more than EUR1.5 billion (USD1.77 billion) in assets across a range of liquid and illiquid alternatives.

As the Covid-19 virus’ spread upended financial markets in Q1, the vehicle’s flexibility allowed the team to cut strategies with higher beta, explained Vuignier, with portfolio managers switching their monthly meetings with Banca March to weekly calls.

“By being closely involved in the portfolio management process and bringing its macroeconomic expertise to the table, Banca March is strongly invested in the success of the strategy,” he said of the relationship with Banca March, a Palma de Mallorca-headquartered, 100 per cent family-owned lender focused predominantly on the Balearic Islands.

“Traditionally, hedge fund strategies are in the business of buy and hold, but we have the ability to be active and dynamic,” he added.

“Although we have made a few changes since inception – owing to the quality of our research and selection – we were able to react quickly when the Covid-19 crisis hit, making some necessary changes to the portfolio. An aftermath analysis was also done, which triggered a change. We had anticipated a better resilience in drawdowns from a relative value fund. It recovered but, as it did not bring the desired level of diversification, we replaced it.”