Robust and consistent alpha
Investcorp-Tages: Best Seeding Platform – Investcorp-Tages anticipates increased investor demand for alpha generation and portfolio diversification. Investcorp-Tages was created in May 2020 as a joint venture between two major players in the alternatives space, Investcorp and Tages. It brought together, in a single entity, the absolute return businesses of both firms, including their industry-leading seeding platforms. The global reach and strength of the combined seeding capabilities of Investcorp-Tages can be demonstrated by the fact that the firm won both Best Seeding Platform in the Hedgeweek European Awards 2021, and the same award in the Hedgeweek US Awards 2020.
Via the combination of Investcorp and Tages, the joint venture has been active in seeding since 2004 and has invested over USD2 billion in capital across more than 40 managers in that time. Across 10 live transactions, seeded managers currently manage over USD8 billion in capital. The joint venture has been actively deploying seed capital since launch, having closed 3 transactions over the past 9 months.
The challenges of the coronavirus pandemic in 2020 created enormous dislocations in the industry, but Investcorp-Tages weathered these storms successfully, adding over USD1 billion in new assets. According to Salvatore Cordaro (pictured), who is co-CEO of Investcorp-Tages along with Lionel Erdely, one consequence of 2020 is that investors are going to be more demanding in terms of alpha generation: “We will see investors differentiating between firms and funds which navigated 2020 successfully and those that didn’t. Robust and consistent alpha will be valued and rewarded, which should benefit emerging managers.”
The growing need for customisation will also play to the strengths of firms like Investcorp-Tages with a broad and deep range of expertise in the alternatives space. “Investors are increasingly including diversification in their allocation criteria and also have a growing need for flexibility. They also want to leverage attractive investment opportunities in areas such as seeding, early-stage investing, co-investment and drawdown funds,” outlines Cordaro. He also highlights the focus on ESG and impact investing, an area where Investcorp-Tages has been an early leader.
Over the course of the year, the firm successfully completed the integration of the Investcorp and Tages investment platforms. Cordaro comments: “The strategic partnership dimension has become paramount to our clients given increased level of customisation needed to meet clients’ investment objectives.
“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. They can only do that with solutions which are optimised not only across the traditional risk/return/diversification dimension, but which also take into account solvency cost and requirements, as well as ESG and sustainability criteria.”
In the past year, the firm has experienced steady and diversified growth across its main areas of expertise. “Our focus on absolute return and high alpha strategies has been relevant 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.”
The teams focus reflects the changing investment landscape: “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 offering optimal return/diversification properties.”
For example, in October 2020, the firm launched a systematic short-term UCITS fund with Eckhardt Trading Company (ETC). The fund had USD115 million in AUM and was the largest alternative UCITS launch in 2020. Commenting on the launch, Cordaro said: “Investcorp-Tages is committed to addressing our clients’ evolving needs by providing access to differentiated, best-in-class managers that offer innovative, diversified solutions. This unique systematic trading solution will provide our clients with an important diversification tool in today’s environment while leveraging periods of market volatility to generate alpha.”
Going forward, Cordaro is confident that the industry can expect increased appetite for customised solutions and robust emerging managers who have the ability to source consistent alpha generating assets and help investors diversify their portfolios, and confident that Investcorp-Tages is well-positioned to benefit from these trends and to continue its dynamic growth.
Salvatore Cordaro, Co-CEO & CIO, Tages Capital LLP
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.