AMERICAS FUND MANAGER INSIGHTS REPORT 2021
FEATURING ANSON FUNDS, ARTISAN PARTNERS, CALVION CAPITAL, EASTERLY INVESTMENT PARTNERS, EQUITAS EVERGREEN FUND, FAIRLIGHT CAPITAL, GRESHAM INVESTMENT MANAGEMENT, HAITOU GLOBAL, LAZARD ASSET MANAGEMENT, MARATHON ASSET MANAGEMENT, OPTIMA ASSET MANAGEMENT AND PRINCETON FUND ADVISORS AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
Next Generation Macro Investing Times are changing. Fast. This new macro era will be determined by the geopolitical competition between the US and China, increasing domestic polarization and fiscal policy dominance over monetary policy. Calvion Capital Management is an alternative asset manager with a distinct approach to macro investing which seeks to capitalize on macro-political regime shifts in developed and emerging markets. By understanding how policy-driven catalysts interact with macroeconomics, and through the use of our quantitative and proprietary Natural Language Processing (NLP) systems, we aim to reduce the left tail of the return distribution with a focus on capturing convexity while navigating the events of this new macro-political era.
CONTENTS
INSIDE THIS ISSUE... 04
OVERVIEW
05
CALVION CAPITAL
06
OPTIMA ASSET MANAGEMENT
08 EASTERLY INVESTMENT PARTNERS 10
HAITOU GLOBAL
13
PRINCETON FUND ADVISORS, LLC
14
EQUITAS EVERGREEN FUND LP
16
FAIRLIGHT CAPITAL
18 20
LAZARD ASSET MANAGMENT
21
ANSON FUNDS
22
ARTISAN PARTNERS
MARATHON ASSET MANAGEMENT
23 GRESHAM INVESTMENT MANAGEMENT 24
DIRECTORY
Published by: Global Fund Media, 8 St James’s Square, London SW1Y 4JU, UK ©Copyright 2021 Global Fund Media Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. Investment Warning: The information provided in this publication should not form the sole basis of any investment decision. No investment decision should be made in relation to any of the information provided other than on the advice of a professional financial advisor. Past performance is no guarantee of future results. The value and income derived from investments can go down as well as up.
AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
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OVER VIEW
CLOSING A STRONG YEAR WITH A POSITIVE OUTLOOK BY ANGELE PARIS
F
ollowing the hurdles generated throughout 2020 by the Covid-19 pandemic and its repercussions, the capital raising environment for hedge funds over the course of 2021 has been generally positive. Experts at eVestment detail the outcome of 2021. “If forced to make an educated guess, it would seem net flow in 2021 will end up reversing the theme of net outflows the industry has felt over the prior three years.” The data provider adds that there are factors that appear to be positively influencing some segments, but which could hurt others. INVESTING IN ALTERNATIVES Equitas CEO and Founder, David Thomas notes how alternatives are becoming a more widely-accepted and widely-used asset class, led by university endowments and family offices. A report by consultancy, McKinsey points out how persistent client demand for alternative asset classes has led to the creation of new types of alternatives as the industry looks to meet client needs, in particular the notable hunger for yield in the current low-interest-rate environment. The report, entitled ‘Crossing the horizon: North American asset management in the 2020s’, details: “This demand has led to a significant broadening of the alternatives universe in three respects: first, the
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emergence of “core” versions of existing alternative asset classes—notably private equity and real estate—that target the white space prevailing lower in the risk-return spectrum; second, the rise of yield-oriented alternative asset classes—principally private credit and real assets—as functional substitutes for fixed income in the portfolio; and, third, the rise of new strategies (often tagged “opportunistic”) that seek out new sources of alpha beyond the boundaries of traditional asset classes and industry sectors.” HEDGE FUNDS Although the hedge fund industry has had a good run in 2021, the trials and tribulations caused by 2020 should not be underestimated. Jerry Wang, CEO of Haitou Global and Managing Partner of Haitou Global Credit Fund, winner of Best Emerging Manager Fund – Credit Hedge, outlines the lessons learnt over the course of the pandemic. “We learned to stick to our guns. Keep faith in your strategy, team and partners during the darkest hours. Once riding off market volatility, you’ll be back on track. We learned to be sceptical. We used our own judgement, absorbing pandemic information from all sources. We responded early to the pandemic – better to be overreacting than sorry.”
ESG AND SUSTAINABLE INVESTING Another area of focus which has come to the fore in the past year is sustainability, as investor appetite for sustainable-conscious investments continues to rise, and a number of large alternatives firms launch sizable funds in that space. “Given the trillions of dollars required to fund the brown-to-green transformation of economies, and the critical role of the asset management industry as an intermediary between sources and uses of capital, sustainability could well be one of the most important sources of new opportunity for asset managers over the next decade,” the McKinsey report concludes. Scott Kerson, Head of Systematic Strategies, Gresham Investment Management, winner of Best CTA Hedge Fund award, feels that ESG and governance issues will create more pressures to do things differently. “The transition to more efficient, less carbon-intensive economies, is going to have all sorts of implications for asset flows and asset allocation, as well as for the way we produce and consume things. And that will continue to create both opportunities and threats to anybody in the space,” he comments.
AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
CALVION
CALVION BEST MACRO HEDGE FUND
C
entral to how New York-based alternative asset manager, Calvion navigated the last 18 months was a combination of three factors: “An excellent team and a flexible process which allowed us to quickly react to the rapid changes we all experienced in Q1; a rigorous investment process and risk management framework specifically geared towards the type of macro regime shifts and political catalysts that we have witnessed; and great investors with whom we worked closely throughout the last 18 months,” according to Pascal Kummert, Founder and CIO. REACTING TO COVID-19 Calvion’s systems alerted them to the developments around Covid-19 in early January 2020, allowing them to get ahead of the curve. “Through this, our understanding of what the characteristics of the virus meant, in terms of required counteractive policy tools, allowed us to position ourselves in February, well before the market eventually reacted in early March,” Kummert says. “We went short equities in the US, on an index level, selected hotel REITs and cut most of our less liquid emerging market exposures,” he says. After navigating the March turbulences profitably, the rest of the year was about picking the right asset classes to play for the recovery. Calvion recently launched a co-investment initiative to allow investors to partner with
them on high conviction trades across credit, equity and macro investments. “It allows institutional investors to participate in the asymmetric upside associated with political catalysts and regime shifts where there is a rich opportunity set,” Kummert comments. Further, Calvion’s firms focus on macro regime shifts, and political catalysts lend themselves clearly towards volatility expressions. “This year, we have added expertise in that area. We believe this will pay real dividends as we enter a more volatile political and macro environment in 2022,” he says. Calvion is planning three new fund launches: a “Frontier Income Growth” fund that harvests FX and local currency rates carrying high-yielding frontier markets, including Egypt, Ukraine, Ghana, Kazakhstan, Uruguay and Nigeria; a “Systematic Behavioural Currencies” trading fund, with shorter horizon systematic strategies that can capture behavioural shifts in FX markets; and the firm will seek to carve out an emerging markets cyclical equitiesfocused crisis recovery fund and an emerging markets technology equities-focused fund.
investment process can identify growing shifts in regimes much earlier than others, which can lead to positions that can be frustrating as the market catches up.” This happened in February 2020, when their Covid-19 hedges actually cost them returns as the broader market initially looked through the risks of a pandemic. Trusting in their process was reaffirmed to Calvion when those hedges played out in March. Looking to the future, Kummert says: “I expect we will open a London office in the next 12-18 months, bringing new investors and different perspectives to the team. As we launch new funds and initiatives, we will broaden our investor base, and that will require flexibility to meet their unique needs. I am excited about the opportunities for growth in the next number of years.”
REFLECTING ON THE PAST YEAR
In terms of lessons learned, Kummert says: “Last year was a year full of lessons. An interesting lesson I learned was that our
PASCAL KUMMERT FOUNDER, CIO, CALVION
Pascal Kummert founded Calvion in 2017. Previously, he was an Executive Director at Goldman Sachs, where he specialised in cross-asset macro, specifically trading European and EM government debt, global currencies, rates and equity index futures. Kummert also was a Vice President at Morgan Stanley, where he traded bonds and credit default swaps of peripheral countries. He started his career at Morgan Stanley as an analyst for Special Situations and Real Estate Private Equity funds. He holds a Bachelor of Science in General Management from the European Business School in Germany.
AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
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OPTIMA ASSET MANAGEMENT
OPTIMA ASSET MANAGEMENT
BEST EQUITY SECTOR-FOCUSED HEDGE FUND – HEALTHCARE
O
ptima Asset Management and Jennison Associates, as the subadvisor for the JENOP fund, have a partnership dating back to 2012. According to Optima: “Our recognition of the opportunity and innovation in the healthcare sector resulted in our launch of the JENOP fund almost a decade ago, and it is gratifying to have that acknowledged with this award. The fund’s recent performance and long-term track record underscores the validity of the investment philosophy and process, and the opportunity for future success of the strategy.”
flow of innovation to address unmet medical needs and reduce costs. This evolution will have a lasting impact on the patient experience, as healthcare switches to more preventive medicine and an outcome-based economic model. This backdrop presents unique opportunities to allocate capital to multiple healthcare industries, regardless of style factors. The investment team has a 22-year history of accurately identifying early stage, highly innovative therapeutic healthcare companies that have the potential to deliver on an unmet medical need.
THE JENOP STRATEGY
EXPANDING THE HEALTHCARE LANDSCAPE
The JENOP strategy has a dynamic investment process that has a history of alpha generation on both the long and short side of the portfolio. The Jennison Healthcare Team’s diverse backgrounds and coverage of all industries gives the fund the ability to invest in opportunities across the healthcare spectrum and exploit dislocations in a sector with significant dispersion. Healthcare is one of the fastest-growing sectors in the global economy which is driving rapid scientific and technological advancements. According to the team, the convergence of technology and consumerisation is fueling an unprecedented
Historically, the majority of innovation has been concentrated in the biotechnology industry. However, the present environment offers the opportunity to allocate capital across the healthcare spectrum, as companies develop new tools, systems and devices to improve the accessibility of healthcare, more easily and accurately diagnose patients, and much more. Jennison says: “We’ve been able to apply our understanding of a company’s total addressable market opportunity, along with an ability to accurately identify the potential risks, to appropriately gain exposure to the
expanding innovative healthcare landscape.” The major trend in healthcare is currently the convergence of consumerisation and technology. According to Jennison, Covid-19 has accelerated this trend, as more consumers are using technology to monitor their health. “As technology improves, the various tools, services, and devices available may play a larger role in the healthcare system’s ability to diagnose, improve outcomes, and lower costs.” One of the by-products of the pandemic has also been the broad realisation of the importance of basic research, and the role life science tools companies played in dealing with Covid-19. From sequencing the virus, to providing reagents and machines for Covid-19 testing, the industry, broadly, stepped up and added value along the entire chain. The investment team says: “We believe this realisation has led to a significant increase in the National Institute of Health (NIH) budget for F2022 and beyond, providing a tailwind to the tools space.” This dynamic, coupled with a healthy pharma/biotech spend on research and bioproduction tailwinds, leads Jennison to be optimistic about what the future holds for the sector.
DAVID CHAN
CFA, CO-PORTFOLIO MANAGER, OPTIMA ASSET MANAGEMENT
David Chan is a Health Sciences Equity Portfolio Manager and Research Analyst. He joined Jennison in 1992. He was previously with the Boston Consulting Group, where he was a Team Leader and Consultant on projects in a wide variety of industries, but with a special focus in the healthcare sector. Chan received a BA in biochemistry from Harvard University and an MBA from Columbia University.
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AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
Optima Asset Management and Jennison Associates are pleased to have been awarded the 2021 Hedgeweek Award for Best Equity Sector-Focused Hedge Fund – Healthcare for the JENOP fund. We appreciate all of our clients and their continued confidence in our JENOP Global Healthcare Fund. Optima Asset Management and Jennison Associates, the adviser for the fund, have a partnership dating back to 2012. Meet our JENOP Co-Portfolio Managers: David Chan, CFA, Managing Director David is a health sciences equity portfolio manager and research analyst. He joined Jennison in 1992. He was previously with the Boston Consulting Group, where he was a team leader and consultant on projects in a wide variety of industries, but with a special focus in the health care area. David received a BA in biochemistry from Harvard University and an MBA from Columbia University. Debra Netscher t, Managing Director Debra is a health sciences equity portfolio manager and research analyst. She joined Jennison in 2008. Prior to Jennison, she worked at Magnetar Capital where she was a senior analyst responsible for health care coverage. Prior to Magnetar, she worked at Amaranth Advisors and Lazard Capital Markets. She began her research career as an associate biotechnology analyst at UBS. She received a BS in health science and MS in physical therapy from Boston University. Daniel Matviyenko, Managing Director Daniel Matviyenko is an equity portfolio manager. He joined Jennison in December 2020. Before joining Jennison, Dan was founder, chief investment officer, and portfolio manager at Malleus Capital. Prior to founding Malleus, Dan was a portfolio manager, managing director, and partner at Tudor Investment. Before joining Tudor, he was a portfolio manager and an executive director at UBS O’Connor. Earlier in his career, Dan held various roles as an equity analyst at a number of firms. Dan holds a BS in finance from the University of Connecticut.
EASTERLY INVESTMENT PAR TNERS
EASTERLY INVESTMENT PARTNERS
BEST LIQUID ALTERNATIVE FUND – EQUITY HEDGE
W
hile Easterly Investment Partners (EIP) is always looking for pivots in the market, 2020 was a major twist. The firm drew on its hard-won experience through other market dislocations and remained focused on the long-term viability of each of its portfolio companies. Jessica Bemer, CFA, Portfolio Manager at EIP, says: “Our fund’s alternative strategy allowed us to compliment and contain the volatility of the long side of the portfolio by writing options and selectively selling short.” Over the last year, EIP has achieved its performance by “tenaciously holding to our process, remaining patient on ugly days, and constantly checking our assumptions,” says Anne Wickland, CFA, Portfolio Manager at EIP. On a portfolio level, the firm focuses on challenging and confirming each investment thesis and looks to generate alpha and moderate risk. “When we lose conviction, we clean up the position and move on with a possible revisit down the road. We value the robust discussions that come from a diversity of opinion, but it’s equally important to practise humility and admit when we are wrong,” Wickland adds. EIP continues to see many dislocations
across the market, both at the sector level and among individual securities. “In every market, if you look hard enough, you will find an idiosyncratic story that is undervalued,” Wickland says. “Companies are managed by humans, and humans make mistakes; that’s when we do our homework and find value over the long-term,” she adds. EIP’S SECRET TO SUCCESS So much of successful investing is managing risk, and the firm focuses as much on generating returns as on limiting risk and being tax efficient for clients. Wickland says: “When we began to lead this fund team, our main goal was to mitigate risk through diversification, reduce beta, and wade into right-sized positions. Sometimes selling a winner is harder than adding to a loser; we are diligent about our price targets and upside. We are very proud of the work we have done on this portfolio.” EIP values different voices and points of view, and as its teams have become more diverse, performance has improved significantly. “We are encouraged by the efforts on the financial industry to support managers that really stand behind ESG and DEI efforts,” Bemer says.
JESSICA BEMER
CFA, PORTFOLIO MANAGER, SENIOR ANALYST, EIP Jessica Bemer is a Portfolio Manager and Senior Analyst at Easterly Investment Partners. Bemer joined Snow Capital in 2006 as a Senior Analyst. In 2014, she was appointed a Portfolio Manager of the Snow Capital Long/Short Opportunity Fund. In 2016, she was appointed a Portfolio Manager of the Large Cap Value Strategy. Prior to joining the firm, she worked at Jennison Associates, where she was responsible for research coverage.
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GROWING AND LEADING EIP After many years of passive investing dominance, investors want above-market returns and they want shareholder voices to be heard. The firm believes that active management is the most effective tool to achieve these goals, as experienced portfolio managers are vocal and astute advocates for shareholders. Earlier this year, EIP acquired Snow Capital Management, with Bemer, Wickland, and the rest of Snow’s investment team all moving to EIP. “We are excited to join an experienced group of colleagues who can open new doors for our sales and distribution efforts while our investment team continues to build on our successful track record,” says Wickland.
ANNE WICKLAND
CFA, PORTFOLIO MANAGER, SENIOR ANALYST, EIP
Anne Wickland is a Portfolio Manager and Senior Analyst at Easterly Investment Partners. Wickland joined Snow Capital in 2006 as a Senior Analyst. In 2010, she was appointed a Portfolio Manager. Currently, she is a Portfolio Manager of the Long/Short Opportunity Fund, Large Cap Value and Equity Income Strategies. Prior to joining the firm, she worked at Prudential Equity Group, Credit Suisse and J.P. Morgan, where she was responsible for research coverage in the specialty hardlines retail, household and personal care sectors.
AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
Thursday February 24, 2022 | University Club of New York
OPPORTUNITIES IN INSTITUTIONALISING
THE DIGITAL FRONTIER REGISTER NOW
HAITOU GLOBAL
HAITOU GLOBAL
BEST EMERGING MANAGER FUND – CREDIT HEDGE
I
n early February 2020, Haitou Global anticipated the inevitable global spread of Covid-19, based on its first-hand experience of SARS in 2003 in China.
REACTING TO COVID-19 “The first thing we did was protect our team,” says Jerry Wang, CEO of Haitou Global and Managing Partner of Haitou Global Credit Fund. “Our Beijing team didn’t come back to the office after Chinese New Year and our New York team started working from home after the first case in Westchester, NY.” The next priority was to protect assets. Haitou started to lower its exposure and duration and raise liquidity. So, when investors redeemed a third of their fund in three months, Haitou had sufficient funds to return their capital. And the third was to improve communications. “We increased communication with our local partners from monthly to weekly,” says Wang. “Our API system pulled in fresh data on loan performance daily. We also set up monthly Zoom conference calls with our investors.” In terms of performance, Haitou’s credit fund targets a return of 12 per cent, and the fund delivered 12.07 per cent in 2020. Wang comments: “We are confident in our lending strategy in emerging markets. We maintained our exposure and only redeemed to satisfy redemptions.”
Haitou’s assets are also protected by collateral and guarantee structures, and bad debts incurred during the worst period of pandemic were paid back 100 per cent when the platforms recovered, based on protective clauses. EXPANDING MARKETS To build on this performance, Haitou is expanding into new markets, such as Mexico and Pakistan, and is diversifying into other assets, including farmer loans, payroll loans and small business loans. Haitou continues to build research and operations capacity in its Beijing office, and plans to add USD50 million new capital for its credit fund in the next three to six months. The lessons that Haitou learned during the pandemic are becoming part of the firm’s culture. Wang comments: “We learned to stick to your guns. Keep faith in your strategy, team and partners during the darkest hours. Once riding off market volatility, you’ll be back on track. “We learned to be sceptical. We used our own judgement, absorbing pandemic information from all sources. We responded early to the pandemic. Better to be overreacting than sorry. “And we learned to over-communicate. We write letters, shoot videos, host conferences, and do whatever we can to communicate directly to investors, to understand their
requirements and to deliver transparency.” Going forwards, Haitou has three key priorities. “Build a diverse team: all our team members are Asian or Hispanic, which is crucial when we invest in Asia, Africa and Latin America. The majority of our team are female, including two investment managers. A diverse team enables us to understand, communicate and commit to emerging markets and disadvantaged communities,” Wang says. “Invest in technology: our tech team is over 40 per cent of our headcount. Technology improves our investment and operations processes, increases our efficiency and capacity, and is a critical part of our success.” “And drive social impact: ESG is embedded in our investment thesis,” Wang says. “Every investment we make must make positive social impact to our communities, whether a Pakistani social bank lending to Muslim women, or an Indonesian collective lending to coffee farmers.”
JERRY WANG
CEO, MANAGING PARTNER, HAITOU GLOBAL Jerry Wang founded Haitou Global in 2014 in New York and manages its strategy and investments as CEO. Prior to founding Haitou Global, Wang was an Investment Manager at University of Notre Dame’s Investments Office, where he managed a portfolio of private and Asian investments. Wang holds a Bachelor’s degree in Engineering from Tsinghua University, and Master’s degrees in Engineering and Business Administration from University of Notre Dame. Wang is CFA and CAIA charter holder.
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AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
Princeton Premium Fund 2021 Hedgeweek Award Winner
Best Liquid Alternative Fund - Multi-Strategy Hedge
Investors should carefully consider the investment objective, risks, charges and expenses of the Princeton Premium Fund. This and other information is contained in the prospectus and should be read carefully before investing. For a prospectus please call the Princeton Premium Fund at 1-888-868-9501. The Fund is distributed by Northern Lights Distributors, LLC, member FINRA / SIPC. Northern Lights Distributors, LLC and Princeton Fund Advisors, LLC are not affiliated. Princeton Fund Advisors, LLC, Bloomberg, Hedgeweek Americas and Northern Lights Distributors, LLC are not affiliated. The Hedgeweek Americas Awards follow a clear and transparent process. For the fund manager categories, the pre-selected three fund shortlists are based on data provided by Bloomberg, analyzing annualized performance by Americas-based funds in their respective categories over a 12-month period from June 1, 2020 to May 31, 2021. The Liquid Alternative manager award categories include North American and South American-based single-manager funds employing a hedge-fund-like strategy outside of the traditional hedge fund structure with a track record of more than 3 years and over $50 million in AUM. In total there were 41,227 votes cast, with 44% of those coming from Managers, 20% Investors and 36% from Service Providers. There was no cost to the Princeton Premium Fund or Princeton Fund Advisors, LLC for winning this award. For the full methodology relating to all the fund manager categories and other information please visit https://awards.hedgeweek.com/americas-awards-2021. Diversification does not ensure a profit or guarantee against loss. Investing involves risk, including loss of principal. Past performance does not guarantee future results. There is no guarantee that the fund will meet it's investment objectives or that the strategy will be successful. 6586-NLD-10142021
PRINCETON FUND ADVISORS, LLC
PRINCETON FUND ADVISORS, LLC BEST LIQUID ALTERNATIVE FUND – MULTI-STRATEGY HEDGE
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rinceton Fund Advisors, this year’s winner of the US Best Liquid Alternative Fund – Multi-Strategy Hedge, believe they were chosen as winner of this award due to the consistency of the results they were able to generate in an incredibly volatile time period. Greg Anderson, President & Portfolio Manager, Princeton Fund Advisors (Princeton), says: “We believe the riskadjusted results we were able to produce for our clients, given the market environment, were compelling.” DEALING WITH VOLATILE MARKETS Of course, conditions were challenging over this time period, with volatile markets in both equities and fixed income. Princeton’s primary focus during this time was controlling risk in the strategy. “By focusing on the risk of each trade and accepting that they will not all be profitable, we strive to avoid larger losses within any one trade through defensive action,” says Zachary Slater, Senior Vice-President and Portfolio Manager, Princeton Fund Advisors. “With this ‘educated loss’ strategy, over the last
19 months we were able to consistently produce positive monthly results,” he adds. A key to Princeton’s performance over the last year has been its discipline with respect to risk management. “The trades we place typically have a six-to-eight-day time horizon,” says Anderson. “This short timeframe allows us to adjust for changing risk levels in the market as we place each new trade.” At the same time, he believes that the elevated levels of volatility that the market experienced over the past year provided an attractive opportunity set for the strategy. RESEARCHING AND REFLECTING Princeton is continuously researching ways to improve their investment management strategy. “The primary focus of our research is risk reduction, which we believe is the best way to improve total return for the strategy,” Slater says. As has been the case for all fund managers, the pandemic has provided an opportunity for Princeton to reflect. Anderson says: “The biggest lesson we’ve learned, or had reinforced, over the past
ZACHARY SLATER
SENIOR VICE-PRESIDENT, PORTFOLIO MANAGER, PRINCETON FUND ADVISORS
Zachary Slater joined Princeton Fund Advisors, LLC and its affiliates in 2011 to conduct and oversee research on new investment opportunities. His experience includes evaluating and monitoring traditional, alternative and private investment strategies. Additionally, he has experience transitioning strategies into different investment vehicles. Slater is responsible for sourcing new managers, conducting due diligence on potential managers and ongoing monitoring of current managers and investments. He holds a BSc from the Daniels College of Business, University of Denver.
AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
year is how important being willing to accept small losses is for the strategy. In time periods such as January and February 2021, this helped the strategy tactically navigate difficult trading environments,” he adds. INDUSTRY TRENDS In terms of key industry trends, Princeton is seeing renewed interest in the liquid alternative space. “With fixed income yields close to record lows, and the potential for both rising interest rates and frothy equity markets, we believe clients are looking for new and different tools to add diversification to their investment portfolios,” Slater says, adding that he feels the strategy has the ability to be deployed in a variety of different ways to help diversify both an equity and a fixed income portfolio. Looking to the future, Anderson concludes: “With continued potential for volatility in financial markets, we see a need for alternative strategies to be available to clients. We look forward to providing potential solutions to our clients in the years to come.”
GREG ANDERSON
PRESIDENT, PRINCETON FUND ADVISORS
Prior to founding Princeton Fund Advisors, LLC in 2011 and certain affiliates, including Mount Yale Capital Group, LLC in 2003 and Mount Yale Asset Management in 1999, Anderson was a Senior Vice President and Managing Director of Investment Manager Search, Evaluation, and Due Diligence at Portfolio Management Consultants, Inc. Anderson was previously employed with Deloitte & Touche where he specialised in the areas of estate planning, health care and non-profit organisations, and tax and personal finance planning for high-net-worth individuals.
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EQUITAS EVERGREEN FUND, LP
EQUITAS EVERGREEN FUND, LP BEST MULTI-STRATEGY – MULTI-MANAGER FUND
E
quitas CEO and Founder, David Thomas voiced his appreciation and pride over winning the ‘Best Multi-Strategy, Multi-Manager Fund Award’ of 2021. “This award is the culmination of years of effort we poured into the Equitas Evergreen Fund. The strength of our organisation, our personnel, our due diligence process, and the resulting performance, deserve recognition. We couldn’t have done it without support from our strong staff, impressive network and, of course, our loyal clients,” Thomas concludes. Equitas works as a fiduciary in the capacity of an outsourced Chief Investment Officer. The company designed and built the Evergreen Fund in-house as an alternative solution by fusing hedged investments and private equity, providing for both liquidity and growth.
OVERCOMING CHALLENGES The last 18 months have certainly been a challenge for the market. “We followed our plan by staying true to our process and delivered results for our partners,” stated Director of Investments, Derek Fossier. “At Equitas, we never try to predict the future, only recognise current opportunities and position accordingly.” Senior Analyst, Rachel Kaplan adds: “Our
hedged investments performed as designed last year and our private equity achieved an outstanding year. All 21 funds in our portfolio were positive.” Equitas will expand the Fund investor base through selective marketing, while continuing to follow the company’s long-term investment strategy. THE FOUR P’s Regarding challenges in the market over the last year-and-a-half, Thomas believes that it is essential for all limited partners to understand the People, Philosophy, Process, and the Portfolio within the Evergreen Fund. “These are four ‘P’s that lead to the fifth ‘P’: strong, long-term Performance,” Thomas explains. “Having this foundation of understanding leads to a better appreciation of the Fund, fewer surprises, and higher longevity for the investor relationship.” On industry trends, Thomas says that alternatives are becoming a more widely accepted and widely used asset class, led by university endowments and family offices. Equity investors, especially in the technology sector, are seeing how much cheaper the valuations are, and how much growth is possible before companies go public. However, Thomas believes that the bond
DAVID THOMAS
DEREK FOSSIER
After 20 years with Wall Street firms, in 2002 David Thomas formed Equitas and the Evergreen Fund, a multi-strategy, multi-manager, alternative investment fund, which has won awards and is tracked in the Bloomberg Database. Thomas is a contracted writer for Forbes Online and writes his investor commentary called the KnowRisk® Report.
Derek Fossier is an Investment Management Consultant with 12 years of experience in the industry. A native of New Orleans, Fossier earned his Bachelor of Science in Economics from Tulane University. Subsequently, he joined the MBA program at the A.B. Freeman School of Business, where he still serves as advisor to the Algorithmic Trading Club.
CHIEF EXECUTIVE OFFICER, SENIOR INVESTMENT MANAGEMENT CONSULTANT, EQUITAS
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market is less of an investment solution today, than it has been for the past 40 years. “With Bellwether Treasury bond yielding around one per cent, and the potential for inflation to return, investors are seeking to diversify into other low correlation asset classes to achieve investment goals.” For decades, Equitas has predominately been an institutional investment firm, but the company is expanding its business into family investments. “We encourage families to think about their investments as a business, such as a family endowment, not as a hobby or a part-time job,” Thomas states. “We manage family investors the same way we manage small institutions, although sometimes they grow to become large institutions.”
DIRECTOR OF INVESTMENTS, INVESTMENT MANAGEMENT CONSULTANT, CHIEF COMPLIANCE OFFICER, EQUITAS
AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
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International Value Global Value Sustainable Emerging Markets Developing World Antero Peak Group
Visit www.artisanpartners.com
Investments will rise and fall with market fluctuations and investor capital is at risk. Artisan Partners Limited Partnership (APLP) is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Artisan Partners UK LLP (APUK) is authorized and regulated by the Financial Conduct Authority and is a registered investment adviser with the SEC. APEL Financial Distribution Services Limited (AP Europe) is authorized and regulated by the Central Bank of Ireland. APLP, APUK and AP Europe are collectively, with their parent company and affiliates, referred to as Artisan Partners herein. Artisan Partners is not registered, authorised or eligible for an exemption from registration in all jurisdictions. Therefore, services described herein may not be available in certain jurisdictions. This material does not constitute an offer or solicitation where such actions are not authorised or lawful. Further limitations on the availability of products or services described herein may be imposed. In the United Kingdom, issued by APUK, 25 St. James’s St., Floor 3, London SW1A 1HA, registered in England and Wales (LLP No. OC351201). Registered office: Reading Bridge House, Floor 4, George St., Reading, Berkshire RG1 8LS. In Ireland, issued by AP Europe, Fitzwilliam Hall, Fitzwilliam Pl, Ste. 202, Dublin 2, D02 T292. Registered office: 70 Sir John Rogerson’s Quay, Dublin 2, D02 R296 (Company No. 637966). © 2021 Artisan Partners. All rights reserved. For Institutional Investors Only—Not for Onward Distribution 11/11/2021 – A21781L
FAIRLIGHT CAPITAL
FAIRLIGHT CAPITAL
BEST EMERGING MANAGER FUND – EQUITY HEDGE
T
he last 18 months have been a very challenging period for everyone. However, as a small company, Fairlight Capital was already working via video calls and using cloud file storage meaning work challenges were not as great for them as for some others. RESPONDING TO COVID-19
In fact, Andrew Martin, Managing Director of Fairlight, says: “In terms of meeting with investors and arranging third-party calls, the acceleration of remote-working technologies has probably helped us.” He adds: “We believed that the markets and economies would bounce back strongly after the dip in March 2020, and so we rotated the portfolio, using the volatility to our advantage, to reposition the portfolio for recovery and subsequent growth. We have done well in finding cheap valuation, quality stocks that also have excellent growth. We have focused, and will continue to have a global focus, on stocks that has enabled us to find better value and businesses across different regions.” LOOKING TO GROW To build on this performance, Martin says: “We will continue to follow the same processes and approach as we have always done, using growth and value metrics
combined with deep fundamental analysis and business quality analysis. As we grow the universe of stocks, we look to migrate to larger companies, but we are still an emerging, smaller fund and so we have a long road ahead of us.” For now, Fairlight are focusing all their efforts on the current portfolio, but soon will consider launching an AI fund that utilises machine learning to match the investment processes they follow in an automated way that will allow them to scan the global universe of stocks on a real-time basis, using the same approach that has led to its success so far. Martin comments: “The model we would employ for such a fund would be based on our internal criteria, rather than historical returns, to ensure that it is future-proof and matches our investment process as closely as possible.”
Over the last decade, long-short equity funds have struggled in comparison to CTA and fixed income strategies. Assets have moved out of long-short equity into index funds and ETFs as well as prominent tech names and themed assets. Fairlight believe that there is a lot of potential for future outperformance in long-short equity funds that work hard at stock picking and fundamental analysis. Going forwards and as Fairlight’s AuM grows, it will migrate to look at larger businesses to invest in, although the approach will stay fundamentally the same. “I believe that what has worked for us in the past will continue to work well in the future, but we will likely have to work even harder to search for undervalued, hidden gems and continue the level of successful performance we have achieved so far,” Martin concludes.
REFLECTIONS AND REALISATIONS
As the markets recover from the impact of the pandemic, Martin says that Fairlight have realised that they need to own the fact that they take on a certain kind of risk: “Ours is to have full market exposure and concentrated positions in names where we have a strong conviction,” he says. “We avoid too much diversification (beyond 8-10 names) in order to maximise returns.”
ANDREW MARTIN
CHIEF EXECUTIVE OFFICER, MANAGING DIRECTOR, FAIRLIGHT CAPITAL
Andrew Martin has over 17 years of institutional investment management experience working for large global insurance companies and asset managers managing multibillion-dollar portfolios. He has developed, structured, and successfully launched several multi-billion-dollar funds and investment structures. He began his career as a Business Consultant with Accenture, working in the energy and financial sectors. Martin graduated with a BSc in Theoretical Physics from the University of York and gained a Doctorate in Astrophysics from the University of Oxford.
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AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
Manager Information Sheet October 2021
Fairlight Capital LLC 500 West Putnam Avenue Suite 400 Greenwich, CT 06830
AUM: $2.70m
+1 203 542 7325 info@fairlightcapital.com
www.fairlightcapital.com @Failight_Cap
Firm: Alternative Investment Manager Founded: April 2013
Fairlight Capital Process
Idea Generation
Sale Process
1.) Idea Generation: Public VC/PE approach, proprietary "Owner Financials" valuation model and public securities database.
Research
2.) Research: statistical quantitative analysis and backtesting of value/growth/quality criteria returns. Qualititative, intensive analysis phase, competitor analysis, multi -decade financial analysis, channel checks. 3.) Purchase Process: stock specific order types, patient trading strategy, optimized to minimize market impact. 4.) Ongoing monitoring: backtesting of value criteria, continuous verification back to original qualitative thesis, quarterly result analysis and rolling news alerts.
Ongoing Monitoring
Purchase Process
5.) Sale process: portfolio rotation based on look-through yield and other metrics. Qualitative factors dependent on value realization, optimized versus Owner Financials portfolio valuation.
Chief Investment Officer
Nick Peters is the Chief Financial Officer of a small manufacturing company located in the Midwest. Here, he is responsible for financial controls, human resources, IT management and operational management. Prior to his current position, Nick worked as an equity analyst at two value oriented asset managers. Nick has extensive experience analyzing microcap stocks and special situations. Nick graduated with a B.S. in Economics from the University of Wisconsin and gained a Masters in Finance from Vanderbilt University. Nick also served in the United States Marine Corps.
Chief Executive Officer
Andrew Martin has over 17 years of institutional investment management experience, working for large global insurance compani es and asset managers managing multi-billion portfolios. He has developed, structured, and successfully launched several multi-billion dollar funds and investment structures. He began his career as a business consultant with Accenture, working in the energy and financial sectors. Andrew graduated with a B.Sc. in Theoretical Physics from the University of York and gained a doctorate in Astrophysics from the University of Oxford.
Disclaimer: THIS IS NOT AN OFFERING OR THE SOLICITATION OF AN OFFER TO PURCHASE AN INTEREST IN ANY INVESTMENT FUNDS MANAGED BY FAIRLIGHT CAPITAL LLC. ANY SUCH OFFER OR SOLICITATION WILL ONLY BE MADE TO QUALIFIED INVESTORS BY MEANS OF A CONFIDENTIAL OFFERING MEMORANDUM AND ONLY IN THOSE JURISDICTIONS WHERE PERMITTED BY LAW. AN INVESTMENT IN THE FUNDS IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. OPPORTUNITIES FOR WITHDRAWAL, REDEMPTION AND TRANSFERABILITY OF INTERESTS ARE RESTRICTED, SO INVESTORS MAY NOT HAVE ACCESS TO CAPITAL WHEN IT IS NEEDED. THERE IS NO SECONDARY MARKET FOR THE INTERESTS AND NONE IS EXPECTED TO DEVELOP. THE FEES AND EXPENSES CHARGED IN CONNECTION WITH THIS INVESTMENT MAY BE HIGHER THAN THE FEES AND EXPENSES OF OTHER INVESTMENT ALTERNATIVES AND MAY OFFSET PROFITS. NO ASSURANCE CAN BE GIVEN THAT THE INVESTMENT OBJECTIVE WILL BE ACHIEVED OR THAT AN INVESTOR WILL RECEIVE A RETURN OF ALL OR PART OF HIS OR HER INVESTMENT. INVESTMENT RESULTS MAY VARY SUBSTANTIALLY OVER ANY GIVEN TIME PERIOD.
LAZARD ASSET MANAGEMENT
LAZARD ASSET MANAGEMENT BEST RELATIVE VALUE HEDGE FUND – LAZARD RATHMORE
T
he Lazard Rathmore strategy has, both over the qualifying 12-month period and on a since inception basis, delivered compelling risk-adjusted returns to investors. Broadly speaking, the strategy aims to deliver equity-like returns, with bond-like risk, while providing a low correlation to traditional fixed income and a low duration exposure. Sarah George, Senior Vice President, Client Portfolio Manager at Lazard, says: “We believe that this investment objective has been substantiated by both the strategy’s long-term and recent performance, and kindly recognised by Hedgeweek/ Bloomberg through the strategy’s receipt of this award.” THE RATHMORE STRATEGY
The strategy has navigated the challenges of the last 18 months through operating collectively, relying on the team’s extensive experience managing and trading hedged convertibles over varying market cycles, and bolstered by the broader, global footprint of Lazard. George adds: “The portfolio management team’s vast experience in the space (senior investment professionals each with 25+ years of experience trading convertible
securities), coupled with the depth of resources afforded to the Team by Lazard Asset Management, have been key to navigating the past months.” Further, George notes that the past 12 months have served to underscore the benefits of this exposure set, and of the Rathmore strategy specifically, in uncertain markets. “We believe that this will continue to be the case on a forward-looking basis, in light of recent market dynamics that would appear to lie ahead,” she says. BUILDING ON THIS PERFORMANCE To build on this performance, the team will continue to focus on return-on-riskcapital as a guiding principal, which includes continuing to enhance and build upon those proprietary systems, tools and processes that the team utilises, in an effort to both navigate and fully capitalise on the unique risks and opportunities presented by the current market environment. This includes a growing emphasis on ESG considerations, which are of significant importance to the strategy. INDUSTRY TRENDS Industry trends Rathmore has seen three key trends emerge within the space over
the past 12 months, each reflected by the Rathmore strategy. First, convertible arbitrage strategies are now steadily attracting capital again for the first time since the Global Financial Crisis. Secondly, post the Archegos PB crisis, leverage has become more available for a strategy like this, as prime brokers have recognised the lower gross/net risk associated with the strategy. And lastly, the strategy’s focus on ESG reflects the increased importance of ESG issues to investors and prospective investors, as well as the investment community as a whole. Going forwards, the strategy expects to see continued investment flows into the space, as investors look to diversify their traditional fixed income exposure away from the traditional 60/40 portfolio allocation that the market has embraced since the early 1980s, in light of the current market backdrop, through alternative credit and relative value products. George concludes: “We expect the recent growth of the asset class to continue, and for the supportive backdrop – as relates to liquidity, financing, investor base, etc. – to continue to provide a solid foundation for return generation.”
SARAH GEORGE
SENIOR VICE PRESIDENT, LAZARD ASSET MANAGEMENT
Sarah George is a Senior Vice President and Client Portfolio Manager focusing on Lazard’s capital structure and convertibles-based strategies. She began working in the investment field in 2010. Prior to joining Lazard in 2010, Sarah worked on the Mergers and Acquisitions team at Debevoise & Plimpton LLP. Sarah has a BA in Political Science from Franklin and Marshall College.
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AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
GreshamQuant – ACAR Fund
Alternative Commodity Absolute Return Fund
Best CTA Hedge Fund
Hedgeweek Americas Awards 2021
Gresham Investment Management, LLC is an investment specialist with more than 30 years of experience in the commodity futures markets. In moving beyond long-only commodity strategies, GreshamQuant launched its flagship ACAR program in the first quarter of 2017. ACAR pursues an alternative markets CTA strategy—a systematic managed futures strategy that seeks to generate absolute returns by capitalizing on price trends of less populated and more esoteric commodity markets.
Contact Information
Michael Hammond, CAIA Head of Global Business Development mh@greshamllc.com +1-212-984-1418 Gresham Investment Management, LLC 257 Park Avenue South, Suite 700 New York, NY 10010
MARATHON ASSET MANAGEMENT
MARATHON ASSET MANAGEMENT
BEST LIQUID ALTERNATIVE FUND – CREDIT HEDGE
F
irms across the asset management industry are beginning to reflect on lessons learned from the pandemic as we move into a new phase. Andrew Brady, Partner, Co-Head of Corporate Credit at Marathon Asset Management, comments: “This environment has provided reminders to prioritise firm-wide coordination to serve clients by investing with humility and a margin of safety, avoid leverage on investment exposures, and to prepare for the unexpected, especially when risk tolerance is high, and attractive investments are scarce.” Marathon has navigated the challenges through its belief that investment flexibility and objectivity, humility in forecasting, experience from past market dislocations, risk discipline, and integration across teams were critical to adapt to the changing landscape. RECENT TRENDS Among recent trends, Marathon has noticed reduced credit spreads while credit risks have increased, which has contributed to the convergence of structures within high-yield loans and bonds; increased government and central banking influence on markets; increased role of electronic trading of debt and automated trading in equities; consolidation of asset managers; increased share of private credit in high-yield markets; improvement in high-yield loan settlements and procedures; GIPS becoming required; ESG awareness
and sensitivity; and improving transparency for clients, among others. “These trends will likely continue,” Brady says, “but our unchanging focus is persistent credit discipline and objectivity while putting client needs first, which has led to record AUM, recurring client participation, and expanded client offerings. As we say, investing is not a sprint, but rather a marathon.” REACTING TO COVID-19 Co-ordinated firm-wide communication and leadership from Marathon’s investment teams and eight partners have been critical to evaluate the challenges and uncertainties of the last year, while also turning into investment mode despite significant uncertainty. Brady says: “We had lighter than normal exposures before the pandemic given concerns about valuations, bullish sentiment, deteriorating credit terms, and economic weakness during 2019. The changing economic outlook required questioning asset values, outlook, downside protection, solvency, liquidity, and other factors across economies generally and high-yield credit specifically.” This re-evaluation led to a disciplined game plan to identify which assets to patiently hold, which to sell, and which to buy. Buys started with investment-grade credit, then migrated to higher quality leveraged credit, then more
idiosyncratic and dislocated credit situations across US and European high-yield loans and bonds. “This was particularly the case in situations where we leveraged our expertise in stressed situations, relationships across companies and other investors, and provided capital solutions,” Brady adds. Marathon plans to build on its track record of favourable performance and risk management across corporate credit, structured and asset-backed credit, and emerging markets. “We believe our willingness to invest and raise capital opportunistically – as shown by creating subprime mortgage funds around 2007, corporate credit funds in 2009, structured credit funds such as PPIP around 2010, and European funds in 2011 to 2014 – was highlighted again in 2019 with a USD3 billion opportunistic draw-down credit fund that was particularly well-positioned over the past year,” Brady says. Marathon continues to broaden its opportunity set for clients, by planning new funds focused on index-aware products for US high-yield bonds, royalties in emerging healthcare companies, and ESG criteria in emerging markets, as well as additional vintages of existing funds focused on assetbased opportunities, real estate opportunities in Europe and CLO equity.
ANDREW BRADY
CFA, PARTNER, CO-HEAD CORPORATE CREDIT, MARATHON ASSET MANAGEMENT
Andrew Brady, CFA, is a Partner and Co-Head of Marathon’s Corporate Credit business, and a Member of the Executive Committee. Brady serves as Portfolio Manager for Marathon’s Collateralised Loan Obligations (CLOs) in addition to other high-yield credit portfolios. He joined Marathon in 2004 after eight years with Indosuez Capital, the merchant banking and high-yield asset management division of Credit Agricole, where he was a Director and Senior Investment Analyst. He holds a BSc in Economics, with a concentration in Finance from University of Pennsylvania’s Wharton School of Business.
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AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
ANSON FUNDS
ANSON FUNDS
BEST EQUITY HEDGE FUND (OVER USD500M)
A
ccording to Anson Funds, the key to navigating the present market environment is to be nimble and adapt the investment and risk management approach to changing circumstances. Moez Kassam, CIO, Anson Funds, says: “With the rise of the retail investor and the extreme moves that so-called ‘meme stocks’ have experienced, prudent risk management processes have become increasingly important to ensure that market actors have enough protection against downside scenarios, which can emerge with alarming speed.”
BEST EQUITY HEDGE FUND
STRATEGIES To achieve its record-breaking performance over the last two years, Anson Funds has relied upon the diversity and versatility of its multi‐strategy approach. Anson Funds utilises several different investment strategies that thrive during different market environments – longs (tactical equity and REITs), shorts (momentum reversals and fundamental shorts) and opportunistic (structured financings, SPACs & catalyst driven investing). Kassam says: “We have been able to harness the opportunities available to us in the overall market environment that manifests in any given period of time.
LOOKING AHEAD Going forward, Anson Funds believes that
Then, as market sentiment changes, we have successfully been able to pass the baton on to other strategies that are better suited for the new reality. This sounds easy to do retrospectively, but it requires significant skill and discipline to execute in real-time when market signals are still clouded with significant statistical noise.” Each of Anson Funds’ sub-strategies generated strong returns during the past year, but some performed better at different times of the year than others.
more volatility is in store for markets. “Many new funds have juiced returns in this period through some combination of leverage and extreme concentration,” Kassam said. “That kind of strategy works until it doesn’t, and then the bottom can fall out of a fund’s performance.” The key, he believes, is to play the long game. “Our investors are looking to compound wealth over the longterm. This is our responsibility as stewards of their capital.”
SECRET TO SUCCESS Kassam adds: “The secret to our success is that we are market agnostic. We invest enormous resources, both in terms of human capital and of machine intelligence, to understand the directional contours of the market at any given time, and then adjust our investment approach accordingly.” Anson Funds has learned that markets, and individual stocks, can act irrationally for long periods of time due to the combination of extremely loose fiscal and monetary policy, and the rise of the retail investor. Firms need to be willing to take losses and move when things don’t go their way.
MOEZ KASSAM CIO, ANSON FUNDS
As Chief Investment Officer of Anson Funds, Moez Kassam advises all funds under management and is responsible for investment strategy, trading and overall investment performance. An active philanthropist, Kassam sits on the boards of the Toronto Library Foundation, the Canadian Olympic Foundation and Ryerson University’s Technology Innovation Circle. In 2018, Moez was named in Canada’s Top 40 Under 40 for extraordinary achievement in both business and philanthropy. Kassam holds an MBA from London Business School and a BA from the University of Western Ontario.
AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
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AR TISAN PAR TNERS
ARTISAN PARTNERS
BEST CREDIT HEDGE FUND
A
rtisan Partners has worked hard to create a strategy that can take advantage of opportunities across all phases of the credit cycle, in both benign and distressed environments, and found that the Covid-19 credit cycle created an environment tailor-made for its approach. DEALING WITH THE EFFECTS OF COVID-19 Bryan Krug, Managing Director at Artisan and Portfolio Manager on its credit team, says: “At the onset of the pandemic, we were active in rescue financing solutions, identifying franchises that would need immediate capital infusions to avoid a liquidity crisis. And, as momentum behind the market’s recovery continued, we remained focused on idiosyncratic and catalyst-driven opportunities.” Since the depths of the Covid-19 crisis, credit markets have made a significant recovery. But, until earlier this year, the rally had largely been uneven, leaving plenty of opportunities to take advantage of situational distress. Even as market benchmark valuations returned to pre-
pandemic levels, areas hardest-hit by the pandemic—energy, leisure and retail— continued to trade wide of 2020 levels. Krug comments: “We leaned into this dispersion, investing in companies facing difficult short-term trends, but with reason to exist in a post-Covid world.” OPPORTUNITIES The firm has also seen plenty of opportunities across the capital structure in leveraged loans. “We tend to focus on loans of strong, niche businesses that are fully levered but have capital structures that are less liquid,” says Krug. “These positions have provided the portfolio with a material carry advantage over the market benchmark and a hedge against interest rate risk.” In terms of new fund launches, Artisan has discussed creating a dislocation strategy to take advantage of the next drawdown in corporate credit markets, though the timeline for any launch is yet to be determined. Krug says: “We think a strategy designed to take advantage of credit market dislocations could be a great investment idea for our clients at the appropriate time.
As it relates to the bank loan market, we are also preparing to launch a floating rate strategy later this year,” he adds. EVALUATING PORTFOLIOS Artisan has seen a fair amount of M&A activity in asset management, with larger firms getting larger, while boutique managers continue to be small and focused. Artisan prefers to align its approach with the latter. “Our ‘distraction-free investing’ model allows us to attract and retain talent by offering the infrastructure needed to manage portfolios, without the need to focus on the broader non-investment side,” Krug says. “We realise that market dynamics, regulation, valuations, monetary and fiscal policy, and investor preferences are out of our control. Therefore, our role is to continue to generate strong returns and provide a great client experience. If we get that right, everything should fall into place,” Krug concludes.
BRYAN KRUG
CFA, MANAGING DIRECTOR, PORTFOLIO MANAGER, ARTISAN PARTNERS
Bryan Krug, CFA, is a Managing Director of Artisan Partners and the founding Portfolio Manager of Artisan’s Credit team. Prior to joining Artisan Partners, Krug was the Portfolio Manager of Ivy High Income Fund at Waddell & Reed from February 2006 to November 2013. Krug joined Waddell & Reed in 2001 as a high-yield Investment Analyst and was later promoted to Portfolio Manager. Earlier in his career, he was affiliated with Pacholder Associates as the primary analyst for a distressed portfolio. Krug holds a Bachelor’s degree in Finance from Richard T. Farmer School of Business, Miami University.
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AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
GRESHAM INVESTMENT MANAGEMENT
GRESHAM INVESTMENT MANAGEMENT BEST CTA HEDGE FUND
D
espite the challenges of the pandemic, Gresham Investment Management is on the rise, with its CTA strategy growing from a dedicated team of four to a largely dedicated team of 12, with a third of that growth occurring since the pandemic began. Scott Kerson, Head of Systematic Strategies, says: “Despite external challenges, we’ve been able to hire high calibre people on the research and technology side.” Much of its success is down to its view of the business as a partnership between Gresham and its investors. “This business is not just about managing other people’s money, it’s about managing money in a collective way in which everybody’s incentives are aligned,” Kerson says. As such, Gresham hard-closed its CTA fund earlier this year due to capacity constraints in order to respect the prerogative of alpha and diversification that the fund is trying to provide. A ROBUST MODEL Gresham differentiates itself in the market by producing a stream of excess returns that are uncorrelated with traditional asset class benchmarks and competing investment styles. Its investment thesis is unique in that
the fund has taken a classical investment toolkit and applied it with a singular focus to exotic or alternative commodity markets. From an investment perspective, the CTA fund has been comfortable over the past 18 months because its models have performed as they should, and not just through having anticipated and delivered positive returns. “Our trading profiles have been normal, our risk profile has been normal, and our transaction and friction costs of implementation have been within the model assumptions that we use,” Kerson says. AN EVOLVING INDUSTRY While Gresham is a trend follower from a market style investment perspective, that is not the case from an industry evolution perspective. However, three things that the fund has shared with the industry is the increasing interest in new asset classes such as crypto assets; the conversation around machine learning and big data; and the growing conversation about ESG. “All of those affect us as a systematic hedge fund in one form or another, but none have really had a material impact; they’ve been relatively independent of the way we manage the model, which is a testament to the robustness of the model design,” Kerson says.
PREDICTIONS FOR THE FUTURE
In particular, Kerson believes that ESG will keep growing in relevance, and the fund will continue to adapt to meet such demands from its investors. However, there are issues that may need further attention at an industry level. Kerson says: “I think there is a large degree of uncertainty around how to integrate ESG concerns within the absolute return asset and systematic space, specifically as you’re not making discretionary decisions about certain companies and commodities. That raises interesting challenges that I think the industry hasn’t yet thought through carefully, not because we haven’t cared about them, but because it’s complicated and nuanced.” Over the coming months, he feels that ESG and governance issues will only create more pressures to do things differently. “The transition to more efficient, less carbonintensive economies, is going to have all sorts of implications for asset flows and asset allocation as well as for the way we produce and consume things. And that will continue to create both opportunities and threats to anybody in the space.”
SCOTT KERSON
HEAD OF SYSTEMATIC STRATEGIES, GRESHAM INVESTMENT MANAGEMENT
Scott Kerson is responsible for strategy research across Gresham’s quantitative trading business. Prior to joining Gresham, Kerson was a partner at AHL Partners, LP, where he was Head of Commodities and a member of the AHL Research Advisory Board. Previously, Kerson held a variety of commodity research and trading positions, including Commodities Model Owner in Barclays Global Investors systematic macro group, Discretionary Trader and Quant at Ospraie and Amaranth, and Managing Director at Deutsche Bank and Merrill Lynch. Kerson holds a BA in Economics with Highest Honors from the University of California at Santa Cruz and departed ‘AbD’ with a MA in Financial Economics from Duke University.
AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
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DIRECTORY ansonfunds.com
Founded in 2003, Anson Funds is a long-short fund manager with the objective of generating consistent positive returns with low volatility and uncorrelated with broad equity markets. Anson Funds currently has US $1.3BN under management. Our flagship fund, Anson Investments Master Fund, was launched in July 2007 and has US $850MM in assets under management. Strategies utilized include tactical longs, REIT investing, fundamental shorts, structured financing, event-driven investing, merger arbitrage and capital structure arbitrage.
www.artisanpartners.com Artisan Partners is a global investment management firm that provides a broad range of high value-added investment strategies in growing asset classes to sophisticated clients around the world. Since 1994, the firm has been committed to attracting experienced, disciplined investment professionals to manage client assets. Artisan Partners’ autonomous investment teams oversee a diverse range of investment strategies across multiple asset classes. Strategies are offered through various investment vehicles to accommodate a broad range of client mandates.
www.calvioncapital.com Calvion Capital Management is an alternative asset manager with a distinct approach to macro investing which seeks to capitalize on macropolitical regime shifts in developed and emerging markets. By understanding how policy-driven catalysts interact with macroeconomics, and through the use of our quantitative and proprietary Natural Language Processing (NLP) systems, we aim to reduce the left tail of the return distribution with a focus on capturing convexity while navigating the events of this new macro-political era.
Easterly Investment Partners
www.easterlyip.com
Easterly Investment Partners (EIP) is the traditional, fundamental based investment arm of Easterly’s platform. EIP combines experienced teams and their investment strategies with the robust framework and institutional diligence of Easterly. Our current investment line-up spans the entire value equity market cap spectrum. Guided by a consistent contrarian investment philosophy, our value strategies are led by industry veterans and experts that have refined their craft and delivered strong performance through multiple market cycles. As of September 30, 2021, EIP had approximately $3.2 billion in AUM.
www.equitas-capital.com
The Equitas Evergreen Fund is a multi strategy, multi manager, alternative investment fund. Since its inception in July of 2003, the Fund has delivered a portfolio diversified across strategies and managers that exhibits low correlations to traditional asset classes. Fund performance ranks in the top 10 of Multi-Strategy category in the Bloomberg database over the last 1, 3, 5 and 10 year periods as of June 30, 2021. The Fund seeks to achieve consistent absolute returns in a variety of market environments through diversified asset management in the areas of hedge funds, private equity, futures, and artificial intelligence. Risk management is an integral element in portfolio engineering. Due diligence blends both quantitative and qualitative aspects to focus on the five Ps: the People in the firm, their Philosophy and investment Process, the resulting investment Portfolio, and Performance during ever-changing markets. Manager meetings are conducted in Equitas and managers office.
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AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
www.fairlightcapital.com Fairlight is an alternative investment manager based in Greenwich, CT. We use a VC/PE investment style applied to public companies, search for quality, low valuation and high growth businesses.
www.greshamllc.com/en Gresham Investment Management, LLC is an investment specialist with more than 30 years of experience in the commodity futures markets. In moving beyond long-only commodity strategies, Gresham Quant launched its flagship ACAR program in the first quarter of 2017. ACAR pursues an alternative markets CTA strategy—a systematic managed futures strategy that seeks to generate absolute returns by capitalizing on price trends of less populated and more esoteric commodity markets.
www.haitouglobal.com
Haitou Global is an Investment as a Service global asset allocation platform that provides fin-tech enabled asset management, investment advisory, investment banking and family office services.
www.optima.com Optima Asset Management provides independent, customized and compelling alternative investments to institutions, high net worth individuals and multi-family office clients. Our reputation, cultivated over the past 30 years, provides our clients access to highly talented managers and differentiated opportunities. Our experience is powered by deep qualitative and quantitative research, leading-edge proprietary technology and a primary focus on client service.
www.lazardassetmanagement.com Lazard Asset Management is known for its global perspective on investing and its experience with global, regional and domestic portfolios. We believe in fostering a culture of constant dialogue between teams. The resulting views bring us the unique, firsthand market insights that are the key to our long-term success. At Lazard Asset Management having an entrepreneurial spirit means that our teams are independent, but supported by a central infrastructure. This central infrastructure allows teams to focus on what they do best. With over $229.7 billion in assets under management (as of December 31, 2020). We have offices located throughout the world in Amsterdam, Brussels, Boston, Dubai, Dublin, Frankfurt, Geneva, Hamburg, Hong Kong, London, Madrid, Melbourne, Milan, Montreal, New York, Palo Alto, San Francisco, Seoul, Singapore, Sydney, Tokyo, Toronto and Zurich.
AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
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FEATURING ANSON FUNDS, ARTISAN PARTNERS, CALVION CAPITAL, EASTERLY INVESTMENT PARTNERS, EQUITAS EVERGREEN FUND, FAIRLIGHT CAPITAL, GRESHAM INVESTMENT MANAGEMENT, HAITOU GLOBAL, LAZARD ASSET MANAGEMENT, MARATHON ASSET MANAGEMENT, OPTIMA ASSET MANAGEMENT AND PRINCETON FUND ADVISORS 26
AMERICAS FUND MANAGER INSIGHTS REPORT 2021 | NOVEMBER
