Wealth & Finance International | Global Guide to Hedge Funds
Getting the Right Balance SAGM Medicis are an independent asset management company specialising in consulting and managing private client portfolios. They spoke to us on how they get the balance right between performance risk and return.
Delivering Time and Time Again
LCJ Investments S.A. is a specialist FX investment adviser, providing FX investment management services to various funds and managed account services. They talked us through their LCJ FX Macro Strategy, and how it consistently delivers results.
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2014 Copperstone Capital. All rights reserved.
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Copperstone Capital is an investment management firm founded in 2009 with offices in Moscow, Russia and London, United Kingdom. We manage wealth for high net worth individuals and institutions through various hedge fund strategies. 16 Sadovnicheskaya Street, Moscow, 115035, Russia T +7 495 988 0010 F +7 495 951 1410 www.copperstonecapital.com
HEDGEfund awards2015 Best Russian Fund (Since Inception)
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Welcome to the Wealth & Finance Global Guide to Hedge Funds Welcome to Wealth & Finance Magazine’s Global Guide to Hedge Funds, With the global economy continuing to gather pace, and further investment opportunities on the horizon, the time for innovation and excellence within the hedge fund industry is now more important than ever before. With this informative guide, we take a look at some the top players in the industry, whose forward thinking services and strategies have allowed them to achieve some truly stellar results for their clients. Among these leading lights is SAGM Medicis, who took the time out to speak to us about the philosophy behind their strategy and how they strike the delicate balance between performance risk and return. We also spoke to LCJ Investments SA, who gave us their insight into how their LCJ FX Macro Strategy consistently delivers results. So to find out more about these exciting companies, read on...
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SAGM Medicis 6.
LCJ Investments S.A. 8.
Alpha Theory 10.
Herculis Partners 12.
Asia Frontier Capital Limited 14.
UMB Fund Services
Wealth & Finance International | Global Guide to Hedge Funds
SAGM Medicis SAGM Medicis was founded in 1999 is located in Geneva, Switzerland, with a philosophy to achieve the best balance of performance risk vs. return, with a particular focus on the risk side.
jurisdictions, or simply cease to exist, providing exciting new challenges for firms such as ours.
Initially, our company provided a wealth management service for private clients. As we had good results with this activity, we decided to replicate this with funds which allowed us to be more active in our management and enabled us started to set up some operations, which had previously been difficult to apply to just our private clients.
Our Medicis Alternative Option Fund targets an annual absolute return, using strategies based on listed EuroStoxx 50 options. Due to the fact that the fund strategies are based on plain vanilla out of money options, the fund’s performance is less correlated to market direction, and depends essentially of volatility and time value. The fund’s goal is to achieve this return with a low level of annual standard deviation.
Following the long tradition of Swiss finance, our business has its roots in independent asset management for an international clientele. This business has been recently augmented by the addition of fund management activities, with a special focus on optimising the balance of performance risk vs. return. It has become increasingly complicated to work within a business structure such as ours, because under the pretence of investor protections, the industry has experienced profound changes resulting from a barrage of extraordinarily expanded regulation.
The use of short dated options, a disciplined approach to profit taking and stop losses and a dynamic position management destined to achieve delta neutrality, are the main drivers of the lower volatility of our returns.
One of the major issues our firm faces is that within this industry it is becoming increasingly difficult for smaller businesses such as ourselves to remain viable and conserve their independence. If we fail to recognize the scale and consequences of these changes, our industry risks losing its current diversity and degrading into a small number of giants.
Risk management is the corner stone of our style in order to achieve and optimal risk/ reward ratio. The fund does not take directional values, nor does try to arbitrate the terms structure, it simply seeks to optimise its option positions in view of the level, of the market and the volatility level of the index.
One of the key factors to our success in managing investment funds is the underlying legal structure. To date, all of our funds are domiciled in Jersey (UK). Although this already provides a high standard of regulation, the European standard UCITS (Undertakings for Collective Investments in Transferable Securities) has become a brand of such a strong confidence in the world of collective management that we have decided to take steps to comply with this international standard in order to ensure our future development. In parallel to this, we are working to expand the range of our funds all while maintaining the same philosophy of coupling performance to risk, but with differing strategies.
Company: SAGM Medicis Name: Armangau Email: Olivier.armangau@sagm.ch Address: Telephone: 16 rue de Candolle, 1205 GENEVA, Switzerland
Within Switzerland, Geneva and Zurich in particular continue to be important centres of expertise where major players in the global financial industry can be found which has prompted our authorities to monitor this activity significantly and has left very little room for smaller managers. This propensity to always be first class could adversely affect the development of fund management leading multitude of actors in the industry to have no choice but to regroup, move to more pragmatic
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LCJ Investments S.A. The LCJ FX Macro Strategy is a fundamental and discretionary global macro strategy expressed through currencies. LCJ was launched in 2007 as an independently managed investment boutique by Conor MacManus, Jonathan Tullett and Leonora Kerry Keane. The co-portfolio managers, Conor MacManus and Jonathan Tullett, have between them over 37 years’ of experience working and trading in FX markets which we believe provides the foundation for success. The LCJ FX Fund Strategy investment universe includes major currency pairs, non-traditional crosses, and emerging market currencies. Employing a diverse range of market data and analysis, and extensive experience of FX Markets, we identify attractive medium-term and long-term opportunities, through which we seek to provide a favorable risk-return profile while protecting capital. Since inception the strategy has been managed through a variety of different economic and market conditions, and has consistently produced long term class-leading risk-adjusted returns utilizing a robust risk management framework. Looking back at 2014, we are happy to report that despite difficult trading conditions in the first two quarters, we finished the year up 10.80% net, maintaining our consistent long term performance track record during what has been a challenging period for the asset class over the past few years, and we were again nominated for an EuroHedge Award (Commodity & Currency), following our previous nomination in 2012. As we moved into 2015, we anticipated the environment being better suited to our Strategy, with the rising volatility and macro factors in play driving divergence between currencies, which allows the Strategy to further capitalize on medium term trends. This has turned out to be the case, despite a dramatic start to the year in January with the removal of the CHF floor by the Swiss National Bank, and a tumultuous August ignited towards month end by the unexpected mini-devaluation of the Yuan by China, we are pleased to report that we have successfully navigated the LCJ Macro FX Strategy through these events in the year to date, highlighting the strength of our risk management, and have made positive returns in 6 of the 8 months to August, resulting in a net gain of +7.84% YTD. Company: LCJ Investments S.A. Address: LCJ Investments S.A. 118 Rue Du Rhône, 1204 Geneva, Switzerland Phone : +41 (0) 22 849 6640 Fax : +41(0) 22 849 6649 Email : info@lcjinvestments.com
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Alpha Theory Former L/S equity hedge fund analyst, Cameron Hight, confronted this reality head on after seeing his fund make avoidable mistakes due to an emotional, non-systematic approach to position sizing. He knew that most critical decision makers, independent of their field of expertise - physicists, actuaries, odds makers, poker players, etc. - employ a strict, non-emotional, repeatable process fuelled by the best information available at any moment. Hight recounted, “Logically, it was clear that investors could benefit from the same emotion-free process.” So he built a crude system at his fund, then left to launch Alpha Theory™ and focus all of his efforts on decision process optimization for fundamental managers.
According to Hight, “Emotion is the bane of efficient decision making. Position sizing requires an explicit, systematic, and repeatable process that incorporates the risk-reward of each position (as calculated by the firm’s analysts) and the constraints the portfolio manager considers critical. Only then can you calculate the position size the ‘unemotional you’ would take and compare it to your current position size”.
Company: Alpha Theory, LLC Email: sales@alphatheory.com Web: www.alphatheory.com Address: USA offices: Charlotte, NC New York, NY Telephone: +1 (866) 482-2177
Alpha Theory™ is patent-pending decision analysis tool that leverages a firms’ fundamental research and its unique portfolio construction and management preferences to drive a systematic and repeatable process for measuring idea quality and optimizing position sizes to improve portfolio performance. Alpha Theory™ quantifies and isolates the firm’s best ideas by distilling the analyst’s fundamental research into four components: the profit if the thesis is correct, the downside risk if the thesis is incorrect and both the probability (conviction) and time horizon for each scenario. It then calculates a risk-adjusted return for each asset and optimizes the position sizes to maximize the risk-adjusted return of the entire portfolio within the user-defined portfolio-level constraints. With Alpha Theory™, fundamental data for active portfolio assets and ideas is aggregated across the entire firm because each analyst updates information through their own tailored interface. As a result, the data critical to making investment decisions is always readily available and up-to-date. The cloud-based software is designed for fundamentally oriented money managers (hedge funds, mutual funds, RIAs, etc.). Inside an organization, the users are anyone involved in the investment process, such as portfolio managers, analysts, associates, and traders.
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Herculis Partners The Herculis Partners Aries Fund pursues a Long/Short investment strategy. Nikolay Karpenko, Board Member, tells us about the fund and its aims.
The industry today The industry’s tectonic movements along with regulatory environment changes are providing quite a challenge for all players, regardless of their size and experience. In these circumstances Herculis Partners views its main task as helping the wealth owners to increase wealth through VC and PE Investments and M&A deals, and to preserve and multiply wealth through passive and active operations on global securities markets. We also endeavour to protect wealth from states, creditors and raiders and pass it on to its successors and distribute wealth on environmental and society needs according to customers altruistic ideals and values.
Herculis Partners SA is a wealth and investment boutique firm which was established in 2009 by group of Russian and Swiss partners for bringing new added value to the wealth owners (HNWIs, family offices, charities and endowments) through a responsible business approach in wealth and asset management and investment banking industries taking into account principles of ethics, transparency and performance. The Herculis Partners “Aries” Fund pursues a Long/Short investment strategy. It is explicitly pointed out that the fund may purchase investment instruments (long positions) as well as short-sell such instruments (short positions) and undertake transactions in derivative financial instruments. Moreover, the fund is entitled to maximise its earnings potential by deploying derivative financial instruments and by financing investments with loans (up to max. 50%). The maximum permissible leverage is the 5-fold value of the fund’s assets (aggregate net value of all long/short positions relative to the fund’s assets). The annual target is 10% in CHF with volatility 12%.
Nowadays, investors are more familiar with alternative investments than they were 20 years ago. The hedge fund industry is growing fast and absorbing huge amount of money. Clients are looking for low volatile instruments but with attractive return in conditions of low interest rates when all securities markets are overvalued. The allocation of alternative investments in their portfolios is achieving 15-20%. It gives a big opportunity to strengthen relationships with the clients as they are becoming keen on alternative investments.
Herculis Partners provides wealth owners with easy access to unique set of alternative investments like hedge funds, private equity funds, wine and precious stone investments in order to preserve and multiply their capital. Our approach is to make alternative investments accessible, liquid and cost effective as much as possible. On top of that, we invest our own capital at the beginning and only then propose to our clients to join us. We call this approach an alignment of interests.
Address: 30 Rue du 23 Juin, 2900 Porrentruy, Switzerland Tel: + 41 32 552 0 227 / + 41 32 446 5 018 Email: info@herculispartners.ch Web: www.herculispartners.ch
There are many pension funds and single and multi-family offices located in Switzerland, and they are our core investors. Also, a welldeveloped financial infrastructure allows make very efficient execution on securities market. And Switzerland has a strong brand of developer of innovative products among global investors. The strongest part of our business is creating tailor-made reverse convertible structured notes with high coupon and 50% barrier for our own proprietary position. Our products are completely different from what other players are pushing on the market. The key advantage is that Investors can join us in our investments and share with us all risks and rewards. The prospective area of our business development is Sharia-compliant products with elements of Social responsible investments.
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Wealth & Finance International | Global Guide to Hedge Funds
Asia Frontier Capital Limited Thomas Hugger is CEO and fund manager at Asia Frontier Capital Limited (AFC), which offers two funds: the AFC Asia Frontier Fund and the AFC Vietnam Fund. The AFC Asia Frontier Fund invests in public equities in fast growing Asian frontier countries and is positioned to take advantage of the continuing economic shifts in these countries, offering high returns combined with significant diversification opportunities.
Since inception the fund has been consistently resilient during periods of significant market downturns which can be attributed to good stock selection and a portfolio that has a very low correlation with world markets. The investment strategy combines a top-down and bottom-up approach, taking advantage of both growth and value opportunities in consumer, infrastructure and financial stocks.
about our markets all they need to do is pick up the phone or send us an email. With this in mind we will have to stop accepting new investors at some stage in the future as we are planning to keep the fund at a boutique size. We can then focus on generating superior returns whilst working with a core group of investors over the coming years.”
Mr Hugger says: “Frontier markets in Asia are going to be the growth story of the next two decades and investors in our fund are getting in ahead of the crowd. Frontier markets in Asia offer the opportunity to invest in the ‘next China’ before stock and asset prices rise. We invest in countries like Bangladesh, Cambodia, Iraq, Laos, Mongolia, Pakistan, Papua New Guinea, Sri Lanka and Vietnam because they are all at a similar stage of economic development as China 25 years ago or Thailand 40 years ago.
Company: Asia Frontier Capital Limited Name: Thomas Hugger Email: th@asiafrontiercapital.com Web Address: www.asiafrontiercapital.com Address: Asia Frontier Investments Ltd., Room 1208, 12th Floor, Loon Kee Building, 267-275 Des Voeux Road Central, Hong Kong Telephone: +852 3904 1015
“Today it might sound unusual to invest in a place like Bangladesh in anticipation of the country becoming a major industrial hub, but their market is developing quickly and the country is strategically located. Twenty-five years ago people were saying it was risky to invest in China but their economy grew by around 10% per year for more than 20 years, making China the second largest economy in the world today.” Mr Hugger explains that every day in China entrepreneurs can be seen shutting down factories in Guangdong province and moving them to Bangladesh, Cambodia, Myanmar and Vietnam. He thinks that this is a new important trend in the development of ‘Emerging Asia’ which has just started and will last for the next decades and Asia Frontier Capital’s investors are already positioned to benefit from this important shift. When allocating capital AFC researches and finds opportunities others have not been looking for. This niche strategy finds small and mid-cap opportunities that large fund management companies are forced to screen out due to their liquidity constraints. Asian frontier markets are attracting attention from international investors, reinforcing the confidence AFC has in its strategy and the countries it invests in. “Since we are a boutique fund management company we will continue to focus on an individualized service so if our investors want to know 12
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UMB Fund Services UMB Fund services provides a broad array of services for a growing client base of mutual funds, hedge funds and private equity funds. Jennifer Casanova, Marketing Manager, told us about the firm’s industry-renowned service.
UMB Fund Services is a client-focused fund services provider offering a strong combination of industry expertise, proven technology and outstanding service. We provide a broad array of services for a growing client base of mutual funds, hedge funds and private equity funds – as well as turnkey solutions to help clients launch a mutual fund, collective investment fund, or a registered hedge fund. UMB Fund Services is a boutique service provider that differentiates itself from competing firms through its intense focus on service. Our company is truly client-focused and continually strives to deliver on our vision of providing the unparalleled customer experience. Our full range of services for hedge funds, private equity funds and fund-of-funds include administration, accounting, tax administration and investor services. We are experts in servicing both unregistered and registered alternative funds and also offer custody services through our affiliate, UMB Bank, n.a. UMB Fund Services is known within the industry for high-touch service and leading -edge technology. We are constantly investing in our technology offerings – including building proprietary technology designed specifically for private equity and hedge fund managers. The AI industry is dynamic, constantly offering new products along with sophisticated fee structures. FastPro, our proprietary general ledger and investor servicing application, is highly customizable and can handle all the nuances of these complex and sophisticated structures. FastPro also delivers unlimited reporting capabilities. Fund managers can generate their own reports or data extracts on demand via the web application. With a mobile app scheduled to launch this year, managers will have complete access to their information anytime, anywhere they have an internet connection. Over the past 12 months, we have continued to grow our business through innovation of turnkey products, expansion of our business via organic growth and acquisitions, and most importantly by providing our clients with the unparalleled customer experience. We remain focused on the fact that our people and the talent, energy, and commitment they bring, are our most important asset. Web: www.umbfs.com
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