Posts Tagged “Institutional Investors”

The Myners Interview 2010 - The role of alternatives in the retail world.

June 18, 2020

An Interview with Paul Marshall, Co-Founder, Marshall Wace.

Paul Marshall, Marshall Wace will be speaking at FundForum International 2010, 28 June - 2nd July in Monaco

Paul Marshall, Co-founder of hedge fund group Marshall Wace, is taking part in the Myners Interview 2010 at Fund Forum, discussing the growing role of alternatives in the retail world. Marshall urges caution on the inclusion of hedge funds in retail products, saying: “I think that there are a relatively small number of hedge fund strategies that can and should be made available to the wider investing public.”

His concern is that within the existing regulatory framework, most hedge funds will be required to dilute their performance. “It is fair to start with the premise that if hedge funds are delivering a good product then they should be available as widely as possible” he says. “But the restrictions placed by the UCITS format limit the number of strategies that can migrate seamlessly to that format.”

The primary restriction imposed by the current UCITS format is the requirement for daily or weekly liquidity – a condition that eliminates a good number of hedge fund strategies.

There have been steps forward to make the UCITS structure more hedge fund friendly. “There have been a number of developments on UCITS III which sets standards around leverage” says Marshall. “And I think that UCITS IV is a further positive development allowing master feeder funds but I don’t think that UCITS will necessarily become more hedge fund friendly from here.”

Meanwhile, a dark cloud looms on the horizon for hedge funds with the current European directive appearing to propose restrictions on hedge fund strategies. “In the past, there were significant restrictions in the mutual fund market around using basic techniques such as leverage or shorting so it was impossible to offer a hedge fund strategy in that format” says Marshall. “Offshore funds had the greater flexibility and that flexibility largely continues to exist. The EU directive will restrict European investors from those flexible funds.”

The reason why this is important, according to Marshall is the strong long term performance of hedge funds. “Hedge funds over almost all time periods offer amongst the best risk adjusted returns of any asset class” he says. “And they are typically non-correlated to other asset classes and generally protect capital during difficult periods, so they should form a very attractive part of any portfolio; sophisticated investors will have up to 30 per cent of their portfolio in hedge funds. It is a great shame that private investors and retail investors can’t have that opportunity because they are a product for widows and orphans.”

While retail investors may struggle to invest in hedge funds, institutions, particularly pension funds, love them. In the US, corporate pension funds have 1-2 per cent invested in hedge funds but US public funds are now significantly increasing allocations. “I foresee that trend happening in the UK” says Marshall. “We are seeing it in Holland and in Australia, markets with strong defined benefit pension schemes, where the lack of correlation is a very attractive proposition.”

The interesting markets of the last two years have offered investment challenges to all investors: “We are having to adapt to an environment where there is much more macro volatility and much more instability created by the unpredictable nature of political decision making” says Marshall. “It opens up opportunities but also means more disruption and noise so you have to be patient for your investment decisions to pay off and more cognisant of macro risk than you have been in the past.”

Post Under: Asset Management

Managing success in a volatile market

June 4, 2020

Laurent Ramsey, chief executive officer, Pictet Funds

Laurent Ramsey will be speaking at FundForum International 2010

Laurent Ramsey is CEO of the investment fund division of the Pictet Group. He is responsible for a group that offers over 80 different products, mostly Luxembourg-based, and distributed over 25 countries to three main client groups. These are institutional clients, wholesale fund buyers, (mainly discretionary portfolio managers) and the retail networks.

Ramsey’s role covers product development, product structuring, product management, marketing and distribution. The only part that he is not responsible for is the actual asset management. Ramsey feels that there have been two main challenges over the last two years. “If we go back in time, our first challenge was to cope with the huge risk aversion that came throughout the sub prime crisis” he says. “We had to cope with clients moving out of any type of risky assets and back into cash.”

This Pictet faced by launching a new range of funds. “We launched a sovereign money market fund, covering all the currencies, which allowed us to capture a lot of the outflows in tough market conditions.”

Not only did it slow the outflows of money, Pictet found new clients during the difficult patch. “We could gain new clients because we had managed to launch such a conservative product offering at the time.” Read more »

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