Profile

EY Targets Global Gender Parity by 2030

EY has sponsored The Hedge Fund Journal’s biennial “50 Leading Women in Hedge Funds” survey since 2011. The latest edition was published in 2017 and honorees included EY’s UK Hedge Funds Sector Co-Leader, Zeynep Meric-Smith. Retaining and promoting women is one dimension of diversity monitored by Diversity Inc, which in 2017 awarded EY the highest ranking in its Top 50 list of US firms. EY has been steadily climbing up this league table for over 15 years. EY has made it into the top 10 for the past 8 years and the top 50 since 2001, in addition to earning a whole host of other accolades from Diversity Inc.

This trophy is among a long list of diversity awards EY has received around the world, in countries including Canada, Mexico, the UK, Germany, Switzerland, Hong Kong, Singapore and Australia. EY also has councils and committees devoted to D&I. EY already appears to be amongst the most progressive companies on diversity metrics but is striving for greater achievements on this front.

EY’s pledge for parity was originally a US-focused one related to remuneration (the White House Equal Pay pledge) but has now gone global with EY’s global Chairman, Mark Weinberger, signing up to Paradigm for Parity (P4P) for the whole firm. P4P aims for 50% of the firm’s senior leadership to be women by 2030; currently, approximately 50% of the trainee intake are women but the percentage at partner level is not yet there.

Disappointed With Hedge Funds?

Investors who focus on the most recent month, quarter or even year of performance for hedge funds should take a step back and consider the perspective of Dixon Boardman, a seasoned pro who has spent nearly three decades investing in alternatives. According to his long experience, “just when the crowd counts an asset class as out is when it often turns around.”  The catalyst for such a sea change? Boardman expects markets to become increasingly driven by fundamentals rather than excess liquidity.  “We are on the cusp of a resurgence for stock picking. Good hedge fund managers have the potential to outperform by identifying the ‘winners’ and ‘losers’ in sectors undergoing secular change.”

As Optima enters its 30th year of operations, the characteristic bonhomie of Boardman, its founder, is not impaired by the perception that the recent performance of the hedge fund, and fund of funds, strategies, has been lacklustre. Industry performance for 2016 was 5.48%, according to The Hedge Fund Journal Hedge Fund Index, as calculated by Blue Lion Research; various other indices were one or two percent either side of this. When expressed as a spread over risk free rates near zero, these levels of returns do in fact match the targets of certain institutional investors, including some pension funds. European investors in general, and insurance companies in particular, may have relatively undemanding benchmarks. However, the social circles in which Boardman moves include the great and the good of the United States, for whom hedge fund returns have latterly lagged expectations. US pension funds and other US institutional investors tend to have absolute return targets of 7% or 8% that hedge funds, on average, have not met post-crisis. The Preqin All-Strategies Hedge Fund Benchmark made 7.4% in 2016 – but that was its best year since 2013.

Limina Financial Systems

After years of consolidation within and between asset servicing and front to back office (F2B) technology, a new entrant might seem startling. But Limina co-founder and CEO, Kristoffer Fürst, is confident that their newly designed offering not only allows fund managers to reduce costs, but is also more functional in two main ways: user-friendliness and automation.

The passion for automating and improving processes that led to Limina was apparent in Fürst’s first job, trading derivatives for Handelsbanken, where he was shocked that so little automation existed for some trading processes. After broad risk, IT and quantitative experience across various investment strategies at Sweden’s largest hedge fund manager, Brummer & Partners (which belongs to The Hedge Fund Journal’s “Europe 50” ranking), project Limina, named after a village in Sicily, began to crystallize in Africa. Fürst met minds with Limina’s business development head, Jamie McLennon, in vanilla-scented Madagascar, where he was scuba-diving as a marine science officer for an NGO, having worked at Google and Goldman Sachs after studying artificial intelligence. “We found that we both came from a similar educational background in finance and programming,” recalls McLennon who continues “it was immediately clear that this was out of the ordinary; from the first day Kristoffer would sit on the beach coding instead of watching the sunset.”

Limina blossomed further in Kenya, where Fürst and his future wife were doing voluntary work teaching Maths, English and Business to women who had no secondary education. Erratic electricity supplies and 24-hour blackouts tested Fürst’s resourcefulness. But with two laptops, two extra backup batteries, and videoconferencing via a 3G internet connection, he built the first version of a cutting-edge system in six months.

Contrarian & Aligned

Many hedge fund managers have spent much or all of their working lives on a figurative “Wall Street,” whereas Senvest’s founding partner started out on “Main Street” – running operating companies. The summer of 1969 saw the US put a man on the moon but today’s Chairman and President of Toronto Stock Exchange listed Senvest Capital [SEC: TSE], Victor Mashaal, had just started to see Canadian retailers attaching his high tech tags to apparel. He had acquired the exclusive Canadian distribution rights to new anti-shoplifting technology developed by Sensormatics Electronics Corp. Later he moved into one of the first pay-TV channels in Canada.

Profile: Stuart Martin

Dechert Partner, Stuart Martin, received The Hedge Fund Journal’s 2017 award for “Law and Practice: Outstanding Contribution”. During his career, Martin has repeatedly been associated with ground-breaking legal work. Following the post “Big Bang” regulatory reforms in the late 80s, he worked on the fledgling offshore fund structures, acted on the first UK unit trust to be authorised under the new Financial Services Act legislation and worked with clients closely associated with the developing offshore fund industry, including the foundation of Dublin’s fund and asset administration industry. As part of Dechert’s nascent London team, he led the work on adapting US style master feeder structures for the London market and has played a leading part in the development of alternative fund structures in liquid and less liquid asset classes, including funds and structures investing in emerging markets and credit. More recently, he has been heavily involved in the development of alternative fund structures focused on loan origination.

Q&A: Scott Sherman, Imagine Software

Four big-picture themes – real-time risk, regulation, speed, and customisation – are driving forces behind the myriad features of Imagine’s offering. Imagine creates the market-leading technologies that help firms adapt to and succeed amidst the twin challenges of ever-faster markets and increasingly complex regulations. Imagine won The Hedge Fund Journal’s 2016 and 2017 award for ‘Best Real Time Portfolio, Risk and Regulatory Solutions’ and we revisited the firm’s New York offices to catch up on how Imagine is serving the industry.

Hamlin Lovell: How has your real-time risk offering evolved?

Scott Sherman: From the very beginning some 23 years ago, we have offered real-time risk management products and solutions. Our first product was geared to the listed equity options markets – which, at the time, were (and still are) among the most demanding in terms of speed and depth of analytics. Over the years, we have expanded our offering across all asset classes while still maintaining the same level of performance and best-of-breed risk analysis. Originally an enterprise locally-hosted product, we were the first to deliver a cloud-based turnkey solution back in 2000, before the adoption of the “cloud” terminology.

Profile: Richard Perry

In 2017 Richard Perry got The Hedge Fund Journal’s “Outstanding Contribution” award for Hedge Funds – Law and Practice; a gong that Simmons & Simmons’ partner, Iain Cullen, has also received in previous years. Perry’s legal career began at Stephenson Harwood, where he qualified in 1990, after reading law at King’s College London. As a newly qualified assistant solicitor working with Andrew Sutch, his focus quickly transitioned from corporate transactional to investment fund work. By 1994 Perry had set his sights on the then emerging European hedge fund industry, and was lured to Simmons & Simmons by its strong reputation in the space. Perry rapidly made partner in 1999.

Scouring European Credit for Value

Generalisations can be dangerous in European credit markets, because any rule has exceptions and it is precisely the anomalies that provide the greatest opportunities. Headline yields for European high yield are well below those for US high yield, but the tables can be turned for mezzanine structured credit, which pays significantly more in Europe than the US. Many segments of direct lending have seen yield compression as tens of billions have been deployed, but a number of niches can still command premium returns and AIMA’s survey Financing the Economy 2016 found that eight of the nine most attractive destinations for private credit were in Europe. Plain vanilla trade finance may now pay as little as 2-3%, but again there are sleeves in the space that offer double digit yields. In consumer debt, whole loans of high quality may only offer high single digit yields, but expertise in acquiring, warehousing and structuring these assets can generate much higher returns. At the same time, Chenavari has more liquid strategies, including a UCITS, with lower return targets and “private wealth managers are quite happy with high single digit returns which have been steadily delivered over the years,” says founder, CEO and co-CIO, Loic Fery.

He is proud of the firm’s first ten years, which have seen the company “build a solid infrastructure and assemble a talent pool to cover the full spectrum of credit assets, something quite unique in Europe”. Chenavari’s reach spans the most liquid indices, options and derivatives, to subordinated bank papers such as contingent convertibles, through to leveraged loans, structured credit, asset backed securities, private debt, bilateral loans with multi-year maturities, and a spectrum of verticals in speciality finance.

Aspect Capital

Aspect Capital celebrates its 20th anniversary this year. The firm’s CEO Anthony Todd reckons that investors have had it too easy for the past 20 years, when a straightforward 60% equities, 40% bonds, portfolio – and indeed a risk parity approach that might have applied substantial leverage to the bond sleeve – generated remarkable returns. “Now, with compressed yields and potentially stretched equity valuations, there is deep concern about where to find steady returns of 4-6% above cash over the next cycle. That’s where quantitative multi-strategy approaches play a role,” he argues.

Aspect was founded in 1997, though its principals had been among the founding fathers of Europe’s CTA industry in the 1980s, and for many years the firm only did medium term trend-following, via its flagship Aspect Diversified programme, albeit with a growing number of “modulating factors” which now form a new product. “This strategy provides portfolio diversification, risk mitigation, and crisis risk offsets,” says Todd.

Sissener Canopus UCITS Marks Five Years

Sissener’s assets have grown to over two billion Norwegian Krone, which is approximately $250 million at current exchange rates. Nearly all of the investor base is Norwegian, high net worth individuals. Most are based in Norway but there are a few expatriates. Sissener has, thus far, done very little marketing outside Norway, and has not yet registered the fund for sale in many other EU countries. Having passed the five year mark that many institutions insist on, Sissener is now seeing inflows ramp up and some local pension funds have started allocating. All of the firm’s assets are now in the UCITS fund. When the company started eight years ago, assets were in unlisted closed ended funds for the first few years.

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