Positive outlook for nimble managers
BNP Paribas Capital Partners: Best Multi-Manager Fund – Multi-Strategy (<USD500 million) –The past year highlighted the importance of having a broad range of offerings and services. Having the ability to move investments across all strategies and rotate from quantitative to discretionary, from liquid to distressed, from one asset class and geography also proved to be key to constructing robust portfolios. This is especially relevant as the environment for hedge funds remains positive.
The industry has obviously been impacted by the pandemic and the dispersion of performance has been unprecedented throughout the industry. Asset raising has been somewhat difficult.
“In in our case, performance has been extremely strong and we have been able to raise assets throughout the pandemic, even opening new accounts in the midst of it. In that sense, we have bucked the industry trends,” Gilles Guerin, CEO of BNP Paribas Capital Partners.
Over the course of the past year, the BNP Paribas business did not change dramatically. However, Guerin outlines how the conditions highlighted how important it is to have a broad range of offerings and services: “The fact that we have had exposure to both hedge funds, private debt and special situations strategies as well as private equity funds mitigated the circumstances. These key factors helped us adapt to the needs of our clients, whether in terms of yield, return or liquidity and this has been a critical part of our success in 2020.”
In Guerin’s view, the market environment has spelt the end of managers using excessive leverage and having large beta exposures: “Capacity to deviate from common themes, and willingness to allocate to emerging and mid-size managers is paramount to deliver absolute returns in a period when macro-economic trends are diverging.
“In this environment, a well-rounded and experienced team of analysts and portfolio managers, with a common history of investing and inside knowledge of niche strategies will allow to tailor funds to client needs, and deliver alpha returns.”
The firm’s outlook for the hedge fund industry has been constructive for the past two years. This was bolstered by its performance which delivered around 10 percent in 2019 and 16 percent in 2020.
“We believe that this trend will continue, as funds will deliver risk-adjusted performance and assets will keep growing, as volatility will remain elevated, and relative value opportunities will abound for the months to come,” Guerin says.
This should benefit agile managers with the ability to adapt quickly. Guerin adds: “We believe it should be a year where dispersion of performance will be high. Focusing on emerging and mid-size managers, looking toward Asia, remaining diversified across strategies albeit relatively concentrated in number of investments, we trust we will deliver strong performance in 2021 for our clients.”
BNP Paribas Capital Partners is holding onto its key goal – to help investors allocate to alternative managers and adapt to their needs and objectives. “We believe that hedge funds will be a great place to be in 2021 to achieve risk-adjusted returns while retaining liquidity. On the private equity side, investors want both strong returns and positive impact and we are in the market with such strategy. In addition, on the private debt side we believe Special Situations, which we are focusing on, will have an extremely rich opportunity set. Allocating and assembling in those three buckets we endeavour to deliver the quality returns that our clients expect,” Guerin concludes.
Gilles Guerin, CEO, BNP Paribas Capital Partners
Gilles Guerin was appointed CEO of THEAM, BNP Paribas Asset Management’s systematic investment division, in 2010, holding this position until September 2013 when he was appointed head of BNP Paribas Asset Management’s alternative and incubation initiative, subsequently renamed BNP Paribas Capital Partners. Gilles joined from HDF Finance in Paris, where he was Deputy CEO, having previously been Managing Director/Partner at AlphaSimplex in Cambridge, Massachussetts.