Time for star managers to stand out
Notz Stucki: Best Multi-Manager Fund – Equity Hedge – Active fundamental investment has retaken the leadership role in the asset management industry and alpha generating, star managers can now stand out.
“Neither quant managers nor passive investment strategies have been able to deal with the capital market volatility as well as active hedge fund managers who were beating the overall indexes by a wide margin,” observes Angel Sanz, CIO, Notz Stucki Group.
In the tumultuous environment, the firm was more active than ever. Initially, it followed the stay-at-home strategy, overweighting investments linked to health care, digitalisation and cleaner energies. After the vaccines proved to be effective, Notz Stucki Group switched its focus to back-to-normal strategies, investing in cyclical and value stocks.
“At the same time, hand we were increasing our allocation to hedge funds, both equity long-short from alternatives to equities, and absolute return funds – from alternative to fixed-income,” Sanz comments.
One of the firm’s winning calls related to China. Notz Stucki heavily overweighted the Chinese market and captured the full force of its rebound. Unlike the world’s other leading economies, which suffered the full force of lockdown measures, China quickly overcame the health crisis and was able to play the world’s saviour, churning out masks and returning to economic growth.
Looking ahead, Cédric Dingens, Head of Alternative Investments Notz Stucki Group, believes current market environment remains favourable for hedge fund managers particularly in global macro, equity long/short and relative value strategies. He says: “The opportunity set for macro investing is good thanks to higher volatility in interest rates, currencies and commodities. The landscape for equity long/short remains fertile with relatively high dispersion between stocks, sectors and countries.
“We believe that Notz Stucki, with its long experience investing with hedge fund managers and the critical size to access the most talented ones, is well positioned to benefit from market opportunities.”
Reflecting on 2020, Dingens notes it was a particularly good year for the firm’s alternative investment funds. “All strategies – Long/Short Equity, Global Macro and Absolute Return – amply outperformed the financial markets and their benchmarks… the year marked the resurgence of active portfolio managers and talent, after an 11-year bull market which had given computer-managed quant or index funds an easy ride.”
Dingens says the year made it clear that there are portfolio managers with talent, star managers who can generate alpha and regularly outperform their peers: “The challenge is to find them, pick them carefully and combine them in high-performance multi-manager portfolios. This has been our area of expertise for over 50 years.”
Notz Stucki’s primary business objective in the year ahead is to increase AuM both organically and through acquisition. It also aims to create more ESG processes internally, to meet client demand in this space.
In Sanz’ view, the main challenges the industry is facing remain largely unchanged – namely margin erosion, increasing regulation costs and more investments in digitising the investment processes and operations.
He says the key to overcoming these hurdles lies in innovation in product generation. Further, he adds: “Managers need to increase their size to get economies of scale and invest in information technologies to increase their efficiency.”
Angel Sanz, CFA, CIO & Head of Asset Management
Angel Sanz joined Notz Stucki in 2012. He is Chief Investment Officer and heads the Asset Management division. As such, he leads the Group’s Asset Allocation department and oversees the Long Only Investments and Alternative Investments teams. He is also a member of the Asset Allocation Committee. Angel has over 25 years of investment experience. Prior to joining the firm, he held three CIO positions at Bankia, BBVA Asset Management and M&B Capital. Before starting his financial career in 1991, he worked for 4 years as a software engineer at AT&T Bell Labs (USA).
Cédric Dingens, Head of Alternative Investments
Cédric Dingens joined Notz Stucki in 2002 and heads the Investment Solutions & Institutional Clients department. He also oversees the Alternative Investments activity and is a member of the Portfolio Management & Hedge Fund Selection team and of the Asset Allocation Committee. Cédric started his career in Banque du Luxembourg (BIL) in 2001. In 2002, he joined Notz Stucki in Luxembourg as a portfolio manager. He has developed the internal quantitative risk management framework before being appointed head of risk management in Geneva in 2010, and then being promoted to his current position in 2016.