“Leave no stone unturned”: CIAM’s Anne-Sophie d’Andlau urges perseverance and diversity in building for success

No stone unturned

Robust, diversified teams that build trust with investors and differentiate themselves from competitors are vital for building long-term success in the hedge fund industry, says Anne-Sophie d’Andlau, co-founder, partner and deputy CEO at Paris- and London-based activist manager CIAM.

D’Andlau, whose firm celebrates its tenth anniversary this year, told this year’s Hedgeweek LIVE digital summit that the main attributes for longevity include perseverance, hard work, and having a strong diversified team who can be trusted during difficult periods.

Speaking during Thursday’s ‘Building for Long-term Success’ panel, she also urged emerging and start-up hedge funds to “leave no stone unturned” when it comes to building connections.

“You have to build trust with your investors - be transparent with them, and make sure what you do corresponds to their needs,” d’Andlau told the panel. She acknowledged the last ten years had not been easy following the Global Financial Crisis, but added she was proud of her firm’s success. “You have to make sure you can differentiate from the rest of your peers.”

Culture is also key to long term success for asset managers, said Sara Rejal, head of liquid alternatives, Willis Towers Watson. She noted the hedge fund industry has often had a “pretty poor reputation” among investors for its “aggressive behaviour” and how it treated clients during the 2008 crash. 

“I would say to new managers: make sure you address this. This is really what determines the long term success of this industry,” Rejal added.

Diversity and ESG within the hedge fund industry – recurring themes at this year’s summit – were also explored further during the session, which was moderated by Nick Mazing, head of research at Sentieo.

D’Andlau explained that CIAM’s strong focus on corporate governance had seen her firm become an early adopter of ESG, while Rejal suggested that succession planning is still a huge challenge in the hedge fund industry, with many firms having been built around star managers, rather than teams.

Start-up managers should also “structure fees in a way that they can come down as AUM goes up”, Rejal observed. “Be creative – listen to what your customer needs.”

Matthew Roberts, partner at Fulcrum Alternative Strategies, Fulcrum Asset Management, flagged up the importance of being “in the right place at the right time” in terms of strategy offering. 

Outlining the concept of “strategy cycles”, he said there are several phases of an investment strategy. Starting with concept, the strategy can take a foothold among investors, and then it moves to the second stage – growth – which can be measured by increases in AUM.

“Eventually there’s a saturation point where everyone who’s going to buy it has bought it. You move into a potential retracement phase,” Roberts explained. “That retracement can be orderly or it can be violent.”

That leads into a fourth phase of redesign – in which fees and mandate are revisited – and reincarnation.

“It’s then either eventually eliminated or you have a new cycle formed,” Roberts said. “The point for managers starting out is where is it interesting to be in that strategy cycle? The most fertile ground for managers looking to launch a particular strategy is either in that concept stage but not necessarily right at the beginning, and also potentially at that redesign phase.”

He added: “Those two areas are where we think there is most fertile ground – at least in terms of strategies being popular. Performance is a different discussion.”

D’Andlau added: “Make sure you choose the right seeder. They are not all equal.

“That’s been something that we saw on the ground many times. You have to make sure that you will be able to manage money the way you want without too much interference. It may sound a bit brutal, but you want to have your freedom… you know you can manage them the right way and you have to retain as much freedom as possible,” she continued.

“Get a robust team from the start, because if it’s complementary and has the right level of diversity, you can think big, and that’s very important.”