Geneva-based investment advisor sees HNWs continue faith in multi-manager firms
Over the past four years, high-net-worth investors have shown a preference for multi-strat specialists, as allocators search for hedge fund strategies capable of better controlling risks and locking-in returns.
Sherban Tautu, Head of Liquid Alternatives at Syz Capital, a Geneva-based wealth advisor, with a long relationship with the hedge fund space, explains the current importance of multi-strat funds, describing them as “stabiliser investments, where risks are tightly controlled, and returns of 5-10 per cent per year are probable.”
Syz advises on CHF1 billion for a small group of families based across Europe, Brazil, the Middle East and Asia. Tautu explained that 60 per cent of its total investments are in hedge funds, including a number of multi-manager and multi-strat specialists such as Millennium Management, Point72 Asset Management and Balyasny.
Currently the firm works with 90-100 hedge fund managers, with Tautu describing multi-strategy and multi-manager platforms as “an ideal way” to start building a foundation for a portfolio, commenting that: “30-40 per cent of investments are placed with secure and successful investment management firms, and 50-60 per cent are invested in alpha seeker managers and experts in their fields.”
This year to date, according to Barclay Hedge Fund Indices, multi-strategy funds have returned 8.51 per cent against a sector-wide increase of 9.88 per cent.
As well as multi-strat players, Syz Capital also invests in managers with a focus on long-short equity strategies across biotech, the security sector, the cloud sector and various areas of the global tech markets.
Tautu described these investments as the innovative side to Syz Capital, and said that, when choosing its managers, Syz Capital looks for strategies with a competitive edge, whether geographic or information-based, which operate in a clear niche, and which must be sustainable across 2-3 years.
He stated that his clients’ current main concerns in the hedge fund space are poor performance and high fees.
Tautu remarked: “The industry as a whole has performed relatively poorly in past years, in comparison to the equity market which has been booming.” On fees he commented: “It’s frustrating to clients when they see that managers are being paid more in fees than they themselves are making in returns from their investments.”
All in all, Tautu thinks that multi-manager funds succeed in bringing stability and good performance to clients’ portfolios.