Increasing need for customised solutions
Investcorp-Tages: Best Seeding Platform – Investors have been increasing their focus on diversifying away from traditional assets and gaining exposure to solid and consistent alpha generation. This has translated into an increased need for steady and new sources of alpha above and beyond a well contained market risks exposure.
According to Lionel Erdely, Co-CEO and CIO of Investcorp-Tages, this focus will create an increased appetite for solid emerging managers, who have demonstrated their capability to deliver on these objectives. It will also increase the need for customised solutions.
These have been two key areas of expertise of Investcorp-Tages since inception.
“Our firm has experienced steady and diversified growth across our main areas of expertise in the past year: seeding, customised hedge fund portfolios with a focus on emerging managers, alternative risk premia and UCITs,” outlines Erdely, “Our continued focus on absolute return and high alpha generating strategies has been beneficial in the demanding environment we have been navigating. We have also extended our asset allocation framework and fund due diligence capabilities to the private debt sector as well as impact investing.”
Erdely expects four principles and evolutions to prevail as the industry continues to strengthen. They anticipate increased discernment from investors between firms and funds that navigate 2020 well compared to those that underperformed. “Robust and consistent alpha will be more valued and rewarded, which should benefit emerging managers,” he says.
Investcorp-Tages anticipates a growing need for customisation as investors increasingly prioritise diversification in their allocation criteria. “They are looking for managers to serve as a strategic partner that understands their objectives and has the capabilities, talent and portfolio breadth to structure investment solutions that meet their needs,” Erdely notes.
Investors also are seeking greater flexibility to leverage opportunities in areas such as seeding, early-stage investing, co-investment and drawdown funds. Erdely notes how Investcorp-Tages is well-positioned to capitalise on these opportunities: “We have developed a robust, broad and flexible investment infrastructure that enables us to address the specific needs of our clients, who are operating in a context of additional regulatory, reputational and liability driven constraints. For example, insurers will need to increase their exposure to alternative strategies, but can only do that with solutions which will be optimised not only across the traditional risk/return/diversification dimension, but also taking into account solvency cost and requirements as well as ESG and sustainability criteria.”
Erdely believes the industry will see an increased focus on ESG and impact investing, with growing opportunities and more capital deployed into seeding.
Further, in a context of tight risk premia across the board for traditional assets and the 60/40 model being increasingly challenged, it is paramount for investors to find investment opportunities that offer the optimal return and diversification properties. This continues to be the focus of the firm’s investment team, with expertise dating back to 1996.
Investcorp-Tages was created through a joint venture earlier this year. The recent combination of the investment platforms between Investcorp ARI and Tages Capital LLP highlights the continued strengthening of the firm’s investment infrastructure to better serve clients with a broader portfolio of solutions.
Erdely remarks: “We are very pleased to have achieved a seamless integration of the Investcorp ARI and Tages Capital LLP investment platforms.”
Co-CEO & CIO of Investcorp-Tages
Lionel Erdely join Investcorp as Head and CIO of Absolute Return Investments in 2013. Previously, Lionel worked for 11 years at Lyxor Asset Management, where he held the dual position of Chief Investment Officer (2004-2013) and Chief Executive Officer of Lyxor Inc. (2009-2013). Lionel has an MBA Degree in Finance from the École Supérieure des Sciences Économiques et Commerciales (ESSEC) in Paris.
Co-CEO & CIO of Investcorp-Tages
Prior to founding Tages Group in 2010, Salvatore was the former Head of Portfolio Management within Alpha Strategies at Credit Suisse. While at Credit Suisse, he also served as Deputy Head of Alpha Strategies, Head of Manager Selection and Strategy Analysis in the Alternative Investments and Mutual Funds Team, and Deputy Head of Hedge Fund Research and Selection in Alpha Strategies.