European Fund Manager Insights 2021 FEATURING EUROPEAN AWARD WINNERS
Featuring Adrigo | BNP Paribas Capital Partners | Enko Capital | Hedge Invest | Notz Stucki | Rhenman & Partners
2021
FUND SUMMARY
RHENMAN HEALTHCARE EQUITY L/S •
•
Annualised return of +20% (net) since inception.
•
25 years managing successful healthcare funds.
•
World renowned industry professionals each with over 30 years of experience, actively involved through the Scientific Advisory Board.
•
Unquestionable alpha generation, outperforming all relevant indices and top quartile in all relevant rankings.
Long term investment horizon: •
Diversified across subsectors, company size and geographies to lower volatility. Active trading around holdings. Predominantly cash flow positive companies. Typically investing post approval, mitigating event risk.
• • •
SCIENTIFIC ADVISORY BOARD – ENHANCING PERFORMANCE AND LOWERING RISK
FUND INFORMATION
•
AUM: Fund: EUR 933m, USD 1095m
KIID AND PROSPECTUS (webpage): https://fundinfo.fundrock.com/RhenmanPartnersFund/
For more than 15 years a Scientific Advisory Board has successfully provided the portfolio manager with enhanced knowledge of scientific rationale, clinical trials, clinical usage, products, companies and market trends.
•
INVESTABLE CURRENCIES: Euro (EUR) / Swedish Krona (SEK) / US Dollar (USD) TARGET FUND SIZE: The Fund Management Company may decide on hard closure when AUM has reached EUR 1bn
The Scientific Advisory Board uses member networks consisting of hundreds of professors at the Karolinska Institute, University of Uppsala and other internationally renowned institutions in Sweden and abroad.
•
RETURN TARGET: Annualised net returns in excess of 12 % over time LEGAL STRUCTURE: AIF / FCP (Fonds Commun de Placement) under Part II of the Luxembourg Law on Investment Funds PORTFOLIO MANAGER: Rhenman & Partners Asset Management AB INVESTMENT TEAM: Henrik Rhenman, Susanna Urdmark, Kaspar Hållsten & Hugo Schmidt
The board has four official meetings a year for in-depth discussions of topics that have been pre-selected by the investment team. In addition, the individual members are available, on demand, for continuous dialogue during the year.
•
AIFM / MANAGEMENT COMPANY: FundRock Management Company S.A. PRIME BROKER: Skandinaviska Enskilda Banken AB (publ) DEPOSITARY AND PAYING AGENT: Skandinaviska Enskilda Banken S.A. AUDITOR: PricewaterhouseCoopers (PwC) SUBSCRIPTION /REDEMPTION: Monthly MINIMUM INVESTMENT: EUR 2,500, SEK 500, USD 300,000*
The board enhances the portfolio manager’s understanding of companies’ complex product pipelines and the competitive environment they operate in, as well as helping to develop strategies for different approval outcomes.
MINIMUM TOP UP: No minimum NOTICE PERIOD: 3 working days MANAGEMENT FEE: 1.00 % to 2.00 %* PERFORMANCE FEE: 10 % to 20 %* Administrative fees are charged in addition to the fees above. Further information is available in the KIID as well as the prospectus (part B, A14-18).
FUND CHARACTERISTICS – IC1 (EUR)
HURDLE RATE – Euribor 90D (high-water mark)
NAV
*Dependant on share class
900 800 700
+20%
600
annualised return (net) since inception
500 400 300
Sep-20
Mar-21
Dec-2 0
Dec-19
Mar-20
Jun -20
Sep-19
Dec-18
Jun-19
Sep-18
Mar-19
Jun-18
Mar-18
Dec 17
Sep-17
Jun-17
Mar-17
Dec-16
Sep-16
Jun-16
Mar-16
Dec-15
Sep-15
Jun-15
Mar-15
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Dec-11
Jun-12
Sep-11
Mar-12
Dec-10
Jun-11
Mar-11
Sep-10
Jun-10
Mar-10
Sep-09
Jun-09
100
Dec-09
200
Rhenman & Partners Asset Management AB is under the supervision of The Swedish Financial Supervisory Authority (Finansinspektionen) as of February 2009.
RHEPA.COM
CONTENTS
INSIDE THIS ISSUE… 04 OPPORTUNITY WITHIN THE STORM
By A. Paris
05 SPECIALIST MANAGERS IN A FAVOURABLE POSITION
Rhenman & Partners: Best Global Equity Hedge Fund
06 FUNDAMENTAL ANALYSIS TO DRIVE OUTPERFORMANCE
Hedge Invest: Best Liquid Alternative Fund – Credit Hedge
08 TIME FOR STAR MANAGERS TO STAND OUT
Notz Stucki: Best Multi-Manager Fund – Equity Hedge
10 INVESTOR ALIGNMENT KEY TO FUND RAISING
Adrigo: Best Emerging Manager Fund – Equity Strategies
12 POSITIVE OUTLOOK FOR NIMBLE MANAGERS
BNP Paribas Capital Partners: Best Multi-Manager Fund – Multi‑Strategy (<$500m)
14 FINDING NEW WAYS OF NAVIGATING THE CHANGING LANDSCAPE
Enko Capital: Best Credit Hedge Fund
16 DIRECTORY
Published by: Hedgeweek, 8 St James’s Square, London SW1Y 4JU, UK www.hedgeweek.com ©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.
EUROPEAN FUND MANAGER INSIGHTS 2021 | Apr 2021
EUROPEAN AWARDS 2021 www.hedgeweek.com | 3
OV E RV I E W
Opportunity within the storm By A. Paris
A
fter the shock of the second quarter of 2020, hedge fund managers went on to perform well over the course of the year. The intense volatility which followed the initial fear sparked by the beginning of the Covid-19 pandemic was rife with opportunity. It allowed managers to prove their value-add and remind their investors why they chose them in the first place. The winners of this year’s awards excelled in their respective fields, outshining the competition and proving their strategies can survive one of the most turbulent episodes in modern history. “Hedge funds performed well in a 12-month period of soaring volatility. Returns across the asset class were of 16.63 percent for the year, with the best-performing strategy – equities – delivering 19.64 percent. Credit strategies provided the lowest returns, at 5.24 percent,” the 2021 Preqin Global Hedge Fund Report finds. However, all was not plain sailing in Europe. Statistics from EurekaHedge show assets under management in the European hedge fund industry stood at USD441.2 billion as at October 2020. This was down USD29.0 billion from the end of 2019. According to the index and data provider this could be, “attributed to both investor redemptions and performance-based decline as a result of the risk-off sentiment caused by the global Covid-19 pandemic.” The winner of this year’s Best Multi-Manager Hedge Fund – Equity Hedge, Notz Stucki was one of the strong performers. Cedric Dingens, Head of Investment Solutions & Alternative Investments at Notz Stucki Group notes: “In this unprecedented year, with markets on a roller coaster ride and massive sector rotation, it is easy to see why quantitative managers and index funds struggled to stay on track. In contrast, Notz Stucki’s alternative strategies fulfilled their protective function, while also generating above-average returns. Our decisions of allocation underlay this success.” Niche strategies focused on sectors which performed well throughout the pandemic were also successful. These included the Rhenman Healthcare Equity L/S, winner of Best Global Equity Hedge Fund. Carl Grevelius, Founding Partner and Head of Investor Relations outlines the drivers of the fund’s success: “Our success is largely due to the many years of close collaboration between our fund managers and the medical experts in our Scientific Advisory Board. Equally important is our investment team’s sole focus on the healthcare sector which includes pharmaceuticals, biotechnology, medical technology, and 4 | www.hedgeweek.com
services. This sector focus clearly give us a significant advantage compared to those investors who monitor and invest in a number of sectors.” Another of this year’s winners, Enko Capital, is also a very focused manager. Winning the Best Credit Hedge Fund, the Enko Africa Debt Fund provides investors with exposure to high yielding fixed income available in the African debt Market. The investment rationale driving the strategy centres on the notion that economic growth in Africa will expand as macro policies include, leading to declining inflation and tighter credit spreads. Throughout 2020, the investment team sought new ways to navigate the ever-changing market conditions and took advantage of the opportunities resulting from those changes. This led to the fund producing its best annual return since inception. Looking ahead, this year’s winners believe investment opportunity for nimble players will be significant. Gilles Guerin, CEO of BNP Paribas Capital Partners, the winner of Best Multi-Manager Fund – Multi-Strategy (<$500m), comments: “We believe it should be a year where dispersion of performance will be high. Focusing on emerging and mid-size managers, looking toward Asia, remaining diversified across strategies albeit relatively concentrated in number of investments, we trust we will deliver strong performance in 2021 for our clients.” Having a targeted approach will be critical to taking advantage of the opportunity available. Staffan Östlin, CIO at Adrigo Asset Management, says he would not be surprised to see equity markets moving more sideways, although with significant short-term shifts in sentiment and volatility. “Stock-picking will become increasingly important to generate alpha which suits our strategy very well,” notes Östlin. Adrigo won the title of Best Emerging Manager Fund – Equity Strategies. The global hedge fund industry has had a good start to the year. According to performance data from eVestment, 80 percent of funds reported positive returns in February. The average positive performance among this group of funds was +4.51 percent. However, managers still have a few potential struggles ahead. eVestment Global Head of Research, Peter Laurelli, highlights: “While February was a generally positive month, and the industry is generally off to a good start to 2021, we are still seeing remnants of the difficulties among some larger funds we saw in 2020.” n EUROPEAN FUND MANAGER INSIGHTS 2021 | Apr 2021
R H E N M A N & PA R T N E R S
Specialist managers in a favourable position Rhenman & Partners: Best Global Equity Hedge Fund
S
pecialist managers are likely to be in a favourable position going forward, as investment trends can be expected to benefit a focused approach. “Specifically, in the long/short equity space, specialist managers can be expected to grow their market share at the expense of broad funds, covering multiple sectors managed by generalists,” comments Carl Grevelius, founding partner and head of investor relations at Rhenman & Partners. The firm manages a specialist fund in the healthcare sector with a strong focus on innovation in the different sub sectors within that. Grevelius is confident Rhenman & momentum stocks. However, we need to strike the right Partners is well positioned to support clients’ investment balance. We need to remember that as a fund, we are needs: “Given we have 19 percent average annual net focused on innovation and have been for the 12 years of its existence.” return for more than a decade and we believe we might experience some short-term volatility in the coming year, On the business dimension, Rhenman & Partners is we have a lot to offer investors in this environment.” highly cognisant of its obligations to clients: “As we have Grevelius caveats the comments by explaining the firm grown over a billion dollars, we need to take care of new recommends investors should have a five-year investment clients. Having more international clients means a greater horizon, at least, to benefit from certain mega trends supneed for communication, which is something we are lookporting the health care sector. ing forward to very much.” The fund performed well over the past year, returning Founded in 2008, Rhenman & Partners Asset Management is a Stockholm-based asset manager 36.5 percent. The team has also grown, having added two members of staff – one portfolio manager and one analyst. focused on managing the portfolio of the niche Rhenman Healthcare Equity L/S launched in 2009. Henrik Rhenman, founding partner and CIO comments on Since inception, the average annual return on the fund the firm’s growth outlook: “We’re bringing in one or two more analysts in the coming year or two. That’s very signifhas been +19 percent, with assets under management having topped EUR1 billion this year. The fund icant because it means a lot of training. But these are very invests globally in companies within pharmaceuticals, talented people and we know what to teach them.” In order to be best prepared for success, Rhenman, biotechnology, medical technology and services and has a notes there are factors Rhenman & Partners needs to flexible investment mandate. Susanna Urdmark, portfolio mankeep in mind both from an investment point of view and also from ager, gives further insight into a business perspective. the investment process: “We Rhenman outlines: “From an have an advisory board made investment perspective, there up of a number of professors is sector rotation which affects who helped us identify the us. This may mean we will companies which demoninvest more in larger strated the strongest companies and be innovations in differsomewhat more ent technologies cautious in conand therapeutic Carl Grevelius Susanna Urdmark Henrik Rhenman sidering high areas.” n EUROPEAN FUND MANAGER INSIGHTS 2021 | Apr 2021
www.hedgeweek.com | 5
HEDGE INVEST
Fundamental analysis to drive outperformance Hedge Invest: Best Liquid Alternative Fund – Credit Hedge
A
s the market environment is expected to become more volatile, asset managers who can rely on truly absolute return strategies and deep fundamental analysis should outperform. “Deep intelligent research is the necessary condition of all our investment decisions. Especially in view of the increasing volatility and challenging market movements we anticipate,” Filippo Lanza, chief investment officer at Numen Capital, observes. “In recent years, at Numen, the subdelegated manager for Hedge Invest, we have developed our fintech platform. This allows us to remotely share research and analysis across our team, relying on a powerful mix of artificial and human intelligence to spot swiftly and efficiently the most relevant pieces of information for our investment process.” This platform harnesses the power of machine learning and natural language processing algorithms. This helps Numen’s professionals to efficiently manage an ever-increasing amount of data and quickly make sense of it via a uniquely collaborative process between analysts and fund managers. “We have built an advanced artificial intelligence platform in-house leveraging structured and unstructured data to provide insights in macro markets. We deploy this expertise via discretionary and systematic macro strategies,” Lanza underscores, “We also have an open collaborative environment between discretionary and quantitative professionals within Numen to get the best out of both.” Lanza explains how the future challenge will be the real test of active asset management: “Performance from active strategies is expected to offer superior returns in a more volatile and complicated set of financial conditions.” This comes after a period of expensive and inefficient alternatives to long only vehicles being offered since 2009. In view of this, the firm’s main focus is capital preservation, with performance coming in second. “We are continuously improving our process to make it more robust and efficient, relying on all the powerful tools offered by new technology in strengthening our investment process,” stresses Lanza. The HI Numen Credit Fund is one of the firm’s flagship funds. It is a credit-focused multi-strategy absolute return funds which applies deep fundamental analysis to 6 | www.hedgeweek.com
compelling investment opportunities across the capital structure. The fund invests primarily in financials, corporates, and sovereigns with a keen focus on liquidity and has a European focus but a global mandate. In 2020 HI Numen Credit Fund made money through its macro book, which helped protecting capital in the volatility of Q2, and through the corporate book both with idiosyncratic shorts (i.e. Wirecard) and longs (stressed and distressed positions). Lanza thinks the environment is still favourable for absolute return strategies while the outlook is very negative for long only funds: “At the moment we remain focused on special situations, working on the entire capital structure of the target companies, from debt to convertible to stocks, and on adding a lot of premium on tail hedges, both on equities and government bonds.” n
Filippo Lanza Founder, Numen Capital – the sub-delegated manager for HI Numen Credit Fund Filippo Lanza is CIO of Numen Capital, which he co-founded in 2008. Numen Capital is the sub-delegated manager of HI Numen Credit Fund, one of the fund in the platform of Hedge Invest Sgr. Previously Filippo was a MD in Global Principal Finance at Deutsche Bank from 2006 to 2007 and, from 2004 to 2005, PM of Ferox Credit Fund at Ferox Capital Management. From 2000 to 2004 he was Head of credit trading in Europe at Lehman Brothers. A CFA since 2001, he graduated (summa cum laude) in Economics from Bocconi University in 1996; he also studied at the LSE (UK, 1994) and Wharton – MBA Program (USA, 1994).
EUROPEAN FUND MANAGER INSIGHTS 2021 | Apr 2021
N OT Z S T U C K I
Time for star managers to stand out Notz Stucki: Best Multi-Manager Fund – Equity Hedge
A
ctive fundamental investment has retaken the leadership role in the asset management industry and alpha generating, star managers can now stand out. “Neither quant managers nor passive investment strategies have been able to deal with the capital market volatility as well as active hedge fund managers who were beating the overall indexes by a wide margin,” observes Angel Sanz, CIO, Notz Stucki Group. In the tumultuous environment, the firm was more active than ever. Initially, it followed the stay-at-home strategy, overweighting investments linked to health care, digitalisation and cleaner energies. After the vaccines proved to be effective, Notz Stucki Group switched its focus to back-tonormal strategies, investing in cyclical and value stocks. “At the same time, hand we were increasing our allocation to hedge funds, both equity long-short from alternatives to equities, and absolute return funds – from alternative to fixed-income,” Sanz comments. One of the firm’s winning calls related to China. Notz Stucki heavily overweighted the Chinese market and captured the full force of its rebound. Unlike the world’s other leading economies, which suffered the full force of lockdown measures, China quickly overcame the health crisis and was able to play the world’s saviour, churning out masks and returning to economic growth. Looking ahead, Cédric Dingens, Head of Alternative Investments Notz Stucki Group, believes current market environment remains favourable for hedge fund managers particularly in global macro, equity long/short and relative value strategies. He says: “The opportunity set for macro investing is good thanks to higher volatility in interest rates, currencies and commodities. The landscape
for equity long/short remains fertile with relatively high dispersion between stocks, sectors and countries. “We believe that Notz Stucki, with its long experience investing with hedge fund managers and the critical size to access the most talented ones, is well positioned to benefit from market opportunities.” Reflecting on 2020, Dingens notes it was a particularly good year for the firm’s alternative investment funds. “All strategies – Long/Short Equity, Global Macro and Absolute Return – amply outperformed the financial markets and their benchmarks… the year marked the resurgence of active portfolio managers and talent, after an 11-year bull market which had given computer-managed quant or index funds an easy ride.” Dingens says the year made it clear that there are portfolio managers with talent, star managers who can generate alpha and regularly outperform their peers: “The challenge is to find them, pick them carefully and combine them in high-performance multi-manager portfolios. This has been our area of expertise for over 50 years.” Notz Stucki’s primary business objective in the year ahead is to increase AuM both organically and through acquisition. It also aims to create more ESG processes internally, to meet client demand in this space. In Sanz’ view, the main challenges the industry is facing remain largely unchanged – namely margin erosion, increasing regulation costs and more investments in digitising the investment processes and operations. He says the key to overcoming these hurdles lies in innovation in product generation. Further, he adds: “Managers need to increase their size to get economies of scale and invest in information technologies to increase their efficiency.” n
Angel Sanz, CFA CIO & Head of Asset Management
Cédric Dingens Head of Alternative Investments
Angel Sanz joined Notz Stucki in 2012. He is Chief Investment Officer and heads the Asset Management division. As such, he leads the Group’s Asset Allocation department and oversees the Long Only Investments and Alternative Investments teams. He is also a member of the Asset Allocation Committee. Angel has over 25 years of investment experience. Prior to joining the firm, he held three CIO positions at Bankia, BBVA Asset Management and M&B Capital. Before starting his financial career in 1991, he worked for 4 years as a software engineer at AT&T Bell Labs (USA).
Cédric Dingens joined Notz Stucki in 2002 and heads the Investment Solutions & Institutional Clients department. He also oversees the Alternative Investments activity and is a member of the Portfolio Management & Hedge Fund Selection team and of the Asset Allocation Committee. Cédric started his career in Banque du Luxembourg (BIL) in 2001. In 2002, he joined Notz Stucki in Luxembourg as a portfolio manager. He has developed the internal quantitative risk management framework before being appointed head of risk management in Geneva in 2010, and then being promoted to his current position in 2016.
8 | www.hedgeweek.com
EUROPEAN FUND MANAGER INSIGHTS 2021 | Apr 2021
B U I L D. P R E S E RV E . G R O W. WHEN IT COMES TO MANAGING YOUR WEALTH, A CLEAR VISION AND A RECOGNISED EXPERTISE IN SELECTING TALENTS MAKE ALL THE DIFFERENCE.
For over 50 years, we have guided our clients through the complexities of the financial world. STA N D I N G B Y YO U S I N C E 1 9 6 4 .
NOTZSTUCKI.COM
Geneva – Zurich – London – Luxembourg – Madrid – Milan
ADRIGO
Investor alignment key to fund raising Adrigo: Best Emerging Manager Fund – Equity Strategies
A
ligning investor expectations with managers’ long-term strategy through diligent and insightful communications is critical to overcoming the challenge of attracting long-term capital. “We have historically been successful in finding hidden gems among Nordic small and mid caps. These names are often overlooked by mainstream investors and poorly covered by brokers,” outlines Staffan Östlin, CIO of Adrigo Asset Management. The firm was acquired by East Capital Group in May 2020 when Adrigo became the group’s absolute return and specialised strategies platform, Over the course of the past year, the firm increased the number of smaller positions in high growth companies, many of which are true disruptors. This, together with ensuring a close alignment with investor expectations, can help Adrigo meet the challenge of attracting long-term capital. Östlin comments: “Our “raison d’être” is that we can produce competitive returns while having a lower overall risk compared to the equity markets. Our clients want exposure towards Nordic small caps but they also value capital preservation. We look for good quality companies with high quality or improving ESG standards, and help them along that path.” Outlining the developments he observed in the market over the course of the year, Östlin says: “The pandemic had some significant effects on the stock markets but also on the way companies operate. As central banks acted swiftly and flushed the market with liquidity, markets calmed down quite rapidly.” Looking ahead, he would not be surprised to see equity markets moving more sideways, although with significant short-term shifts in sentiment and volatility. “Stock-picking will become increasingly important to generate alpha which suits our strategy very well,” notes Östlin. The year has also witnessed a giant leap in the use of digital solutions along with the capital markets’ increased focus on sustainability. These trends have served Adrigo 10 | www.hedgeweek.com
well as the firm benefited from having the right exposure to these developments and its core holdings demonstrated resilience. The Adrigo Small & Midcap long/ short fund – which won this year’s Emerging Manager Award for equity strategies – is an actively managed equity hedge fund, targeting absolute returns with a low and controlled risk-return profile. It invests in Nordic Small & Midcap companies. The portfolio normally consists of 25-30 holdings and 15-25 short positions. The net exposure to stocks is between 20-50 percent, with a gross exposure of 170-190 percent . Delineating its investment approach, Östlin says: “We analyse corporate accounts, meet with managements, and interview people who provide insight into the outlook for a company or industry. “We seek to establish a view as to whether a stock is under or overvalued and, importantly, to identify catalysts which might drive a revaluation. Our methodology for fundamental research has been successfully applied in both up and down markets.” Adrigo focuses on its domestic markets when investing, explaining that: “We prefer to dig where we stand, i.e., to operate solely in the Nordic region, where our careers have been focused for close to 30 years. This is where we should best understand how things work, and this is where we have our contacts. In our strategy, all investments are in the Nordic region, which we deem the safest place for us to invest.” n Staffan Östlin CIO, Adrigo Staffan Östlin (Portfolio Manager and CIO) has a broad and successful background as an analyst and stockbroker with, among others, Carnegie, SEB Enskilda and Handelsbanken. During the years 2006 until 2013 Staffan ran his own business with investments and corporate finance. Staffan’s most recent position prior to joining Adrigo was from a role as Fund Manager at the hedge fund Quest 1, focusing on Nordic Small & Midcap companies.
EUROPEAN FUND MANAGER INSIGHTS 2021 | Apr 2021
Adrigo Small & Midcap Long/Short An award-winning hedge fund stock-picking across the Nordic markets The investment universe, which consists of stocks with a market capitalization up to EUR 6.5bn, is characterized by limited sell-side research coverage, which increases the likelihood finding mispriced assets. The fund seeks to exploit such situations through proprietary fundamental research. Key for the investment thesis is to identify change that will affect share price and release investor value. Find out more at www.adrigo.se
B N P PA R I B A S C A P I TA L PA R T N E R S
Positive outlook for nimble managers BNP Paribas Capital Partners: Best Multi-Manager Fund – Multi-Strategy (<$500m)
T
he past year highlighted the importance of having a broad range of offerings and services. Having the ability to move investments across all strategies and rotate from quantitative to discretionary, from liquid to distressed, from one asset class and geography also proved to be key to constructing robust portfolios. This is especially relevant as the environment for hedge funds remains positive. The industry has obviously been impacted by the pandemic and the dispersion of performance has been unprecedented throughout the industry. Asset raising has been somewhat difficult. “In in our case, performance has been extremely strong and we have been able to raise assets throughout the pandemic, even opening new accounts in the midst of it. In that sense, we have bucked the industry trends,” Gilles Guerin, CEO of BNP Paribas Capital Partners. Over the course of the past year, the BNP Paribas business did not change dramatically. However, Guerin outlines how the conditions highlighted how important it is to have a broad range of offerings and services: “The fact that we have had exposure to both hedge funds, private debt and special situations strategies as well as private equity funds mitigated the circumstances. These key factors helped us adapt to the needs of our clients, whether in terms of yield, return or liquidity and this has been a critical part of our success in 2020.” In Guerin’s view, the market environment has spelt the end of managers using excessive leverage and having large beta exposures: “Capacity to deviate from common themes, and willingness to allocate to emerging and midsize managers is paramount to deliver absolute returns in a period when macro-economic trends are diverging. “In this environment, a well-rounded and experienced team of analysts and portfolio managers, with a common history of investing and inside knowledge of niche strategies will allow to tailor funds to client needs, and deliver alpha returns.” The firm’s outlook for the hedge fund industry has been constructive for the past two years. This was bolstered by its performance which delivered around 10 percent in 2019 and 16 percent in 2020. “We believe that this trend will continue, as funds will deliver risk-adjusted performance and assets will keep 12 | www.hedgeweek.com
growing, as volatility will remain elevated, and relative value opportunities will abound for the months to come,” Guerin says. This should benefit agile managers with the ability to adapt quickly. Guerin adds: “We believe it should be a year where dispersion of performance will be high. Focusing on emerging and mid-size managers, looking toward Asia, remaining diversified across strategies albeit relatively concentrated in number of investments, we trust we will deliver strong performance in 2021 for our clients.” BNP Paribas Capital Partners is holding onto its key goal – to help investors allocate to alternative managers and adapt to their needs and objectives. “We believe that hedge funds will be a great place to be in 2021 to achieve risk-adjusted returns while retaining liquidity. On the private equity side, investors want both strong returns and positive impact and we are in the market with such strategy. In addition, on the private debt side we believe Special Situations, which we are focusing on, will have an extremely rich opportunity set. Allocating and assembling in those three buckets we endeavour to deliver the quality returns that our clients expect,” Guerin concludes. n Gilles Guerin CEO, BNP Paribas Capital Partners Gilles Guerin was appointed CEO of THEAM, BNP Paribas Asset Management’s systematic investment division, in 2010, holding this position until September 2013 when he was appointed head of BNP Paribas Asset Management’s alternative and incubation initiative, subsequently renamed BNP Paribas Capital Partners. Gilles joined from HDF Finance in Paris, where he was Deputy CEO, having previously been Managing Director/Partner at AlphaSimplex in Cambridge, Massachussetts.
EUROPEAN FUND MANAGER INSIGHTS 2021 | Apr 2021
BNP PARIBAS CAPITAL PARTNERS 38 professionals based in Paris with 16-year average experience in alternative assets
Liquid Alternative (HF/UCITS) Bespoke Funds Advisory and selection services Managed accounts platform (via Innocap)
EUR 6 billion assets under management advisory and administration
Private Equity & Private Debt Funds of Funds Advisory mandates
Seasoned in conducting full Investment and Operational Due Diligences
Private Assets Fund Support Administration services for in house and external private equity, infrastructure and debt funds
Client focus: Institutional, Corporates and Private Banks
WHAT HELP DO WE BRING?
WHAT ARE ALTERNATIVE MANAGERS?
Using liquid instruments to target a performance decorrelated from traditional markets Investing in unlisted securities such as unlisted debt instruments and shares of private companies
Source: BNP Paribas Capital Partners, February 2021
Incubation Advisory mandate from BNP Asset Management to manage its strategic incubation portfolio and attached seed money
Customize and manage a portfolio of managers Pool interests in a fund of funds Selection among the best managers Minority stake in innovative asset management companies in the interest of growth
E N K O C A P I TA L
Finding new ways of navigating the changing landscape Enko Capital: Best Credit Hedge Fund
H
edge funds must find creative ways of demonstrating their skill and ability to solve the issues their clients face. The infrastructure they employ will also be thrown into the foreground as the sector steels itself to face the challenges ahead. “As hedge funds continue to adapt to changes caused by Covid-19, the infrastructure firms employ will have to continue to be relevant and sufficient. Alongside this, firms will have to keep up with the increased levels of reporting and regulatory requirements that institutional investors expect,” comments Craig Stanley, CFA, Chief Operating Officer, Enko Capital. In fact, from an operational standpoint, the firm has deepened and extended its operational and IT infrastructure to ensure the team is able to work remotely for as long as necessary. Although Enko made a seamless transition to remote working, it has posed challenges to capital raising. “In-person meetings and due diligence are now conducted virtually. This has caused a decline in progress with certain investors who wish to complete their due diligence in-person. Having said this, Enko was still able to onboard a number of new investors, including a NYSE-listed US corporate pension fund, in 2020,” observes Stanley. From an investment perspective, Enko adapted to the uncertainty caused by the pandemic. In terms of strategy, the investment team sought new ways to navigate the ever-changing market conditions and took advantage of the opportunities resulting from these changes. In 2020, this led to the Enko Africa Debt Fund producing its best annual return since inception. In terms of the growth outlook, following a strong year, Stanley believes erratic economic data and policy changes make allocation decisions more difficult for institutional investors. This uncertainty combined with the extreme limitations on travel and in-person meetings will continue to make it difficult for managers to attract investors and inflows: “To overcome this, hedge funds will have to fundamentally rethink, reorganise and adapt their capital raising to new paradigms that even allocators are having difficulty adopting.” 14 | www.hedgeweek.com
In this environment, Enko is striving to become the market leader in African-focused investments. “Having generated positive calendar-year returns since 2017 across a wide spectrum of market returns, the Enko Africa Debt Fund has been able to support our clients and their internal investment objectives. The Fund has successfully achieved its absolute return mandate over the last 4.5 years,” Stanley says. The firm is also aiming to further diversify its business by seeking opportunities across Africa that do not fall within the scope of its existing strategies. “Over the coming year, we expect the industry to be affected by the speed at which governments allow businesses and their employees to return to normal working routines, and the affectedness of vaccines across the world. “Enko is well placed to deal with this. Our local presence in Africa, with offices in Johannesburg, Abidjan, and PortLouis, allows us to be in closer proximity to our investment universe. This allows us to continue to understand the economic and political landscape we are dealing with and make better informed investment decisions,” Stanley outlines. n
Craig Stanley Chief Operating Officer, Enko Capital Craig is COO at Enko Capital, an Africa-focused investment firm based in London and Johannesburg managing an absolute return Africa debt strategy and a pre-IPO Africa private equity fund. Craig has over 23 years of investment experience, working both as a pension/superannuation consultant, as well as for asset management firms. Over his career, he has lived and worked in the US, Japan, Australia, and the United Kingdom. For the past 12 years Craig has been immersed in the African and global frontier space in listed equities, debt, real estate, private equity, and private debt. Prior to joining Enko, Craig was a Managing Director at Terra Partners, a global frontier hedge fund manager. Craig has authored dozens of articles and white papers on a wide range of frontier capital market and economic topics. Craig earned his BA in Political Economy from New York University where he graduated magna cum laude at the age of 20, and a Masters in Japanese at the University of Colorado, Boulder. Craig was awarded the Chartered Financial Analyst designation in 2005.
EUROPEAN FUND MANAGER INSIGHTS 2021 | Apr 2021
African Alternative Asset Management E N KO C A P I TA L M A N AG E M E N T L L P VALUE IS THE SUM OF OUR PARTS w w w. e n k o c a p i t a l . c o m
D I R E C TO R Y
Adrigo is a hedge fund manager which invests in Nordic high-potential stocks, controlling risk while targeting absolute returns. The fund Adrigo Small & Midcap L/S has previously been rewarded the prestigious EuroHedge Awards “New Fund of the Year”, Eurekahedge Global Hedge Fund Awards “Best New European Hedge Fund” and most recently Euroweek European Awards “Best Emerging Manager – Equity Strategies”. Adrigo is part of East Capital Group, an independent asset management group that comprises several strategies and specialisations, and offers active management solutions in equities, bonds and real estate assets with a clear ESG framework. Founded in Sweden in 1997, East Capital Group manages a total of USD5.5 billion for a broad range of international investors including leading institutions, companies and private individuals.
www.adrigo.se
www.bnpparibas.com
Contact: communications@eastcapital.com | LinkedIn
BNP Paribas Capital Partners specialises in selecting external alternative managers and fund of funds management. Its mission is to support investors to enable them to best allocate their assets to alternative managers through our dedicated investment solutions or our club funds (open to multiple investors with common objectives). As of 31 December 2020, BNP Paribas Capital Partners manages, advises or administers EUR6 billion of assets and relies on a team of 38 professionals based in Paris, all alternative investment specialists: from the most liquid management (UCITS funds with daily liquidity) to at least liquid (private equity funds or closed infrastructure funds with a maturity of more than 10 years). BNPP CP’s universe also includes private credit strategies (direct lending, special situations, and distressed). The teams focus on designing solutions to meet the ever specific needs of qualified investors (institutional and family offices) and private banks. Contact: Charlotte Laurent | charlotte.laurent@bnpparibas.com | +33 1 58 97 22 44
ENKO CAPITAL Enko Capital is an Africa-focused asset management firm founded in 2008. The firm makes investments across the African continent in the debt, equity, and private equity spheres. The firm manages in excess of USD530 million. Enko’s investors and clients are based around the world in Africa, Europe, US and Asia, and include national pension funds, development agencies, corporate pension funds, central banks, and family offices.
www.enkocapital.com
Contact: Craig Stanley | craig.stanley@enkocapital.com | +44 (0)20 7881 0030
HEDGE INVEST Hedge Invest is an Italian independent asset management company specialised in the creation and management of alternative investments. Founded by the Manuli family in 2000 to initially leverage off their multi-year experience as hedge fund investors, the company has since developed, expanding its offering to include alternative UCITS and closed-end funds (real estate, private debt, distressed assets). With a team of 24 people in its Milan and London offices, Hedge Invest is one of the most active players in the European alternative asset management industry.
www.hedgeinvest.it
Contact: Laura Baldin | laura.baldin@hedgeinvest.it | +39 02 667 4430
Founded in 1964, Notz Stucki is today one of the largest independent asset management groups in Switzerland and Europe. Over the last 55 years, Notz Stucki has developed unique expertise in selecting the world’s best fund managers and bringing them together to build robust and effective portfolios. At the same time, Notz Stucki has built a diversified range of traditional strategies with a convincing track record. International and sophisticated, the Group’s client base is comprised of wealthy individuals, family offices, pension funds, asset management firms and companies that share the same demand for superior absolute performance and highly personalised service. Wholly-owned by its directors, Notz Stucki is fiercely independent and free from any outside pressure that could adversely affect its impartiality. The directors invest alongside clients, thereby ensuring their interests are perfectly aligned.
www.notzstucki.com
16 | www.hedgeweek.com
Contact: Ana-Maria Fojorey | geneva@notzstucki.com | +41 22 906 5250
EUROPEAN FUND MANAGER INSIGHTS 2021 | Apr 2021
D I R E C TO R Y
RHENMAN & PARTNERS Founded in 2008, Rhenman & Partners Asset Management is a Stockholm-based asset manager focusing on managing the portfolio of a niche fund registered in Luxembourg: Rhenman Healthcare Equity L/S (RHE L/S), launched in 2009. The fund is managed by FundRock Management Company SA, who have commissioned Rhenman & Partners Asset Management to manage the fund’s portfolio. Since inception of the funds in 2009, the average annual return has been +20 percent for RHE L/S. Total assets under management are approximately EUR900 million.
www.rhepa.com
Contact: Carl Grevelius | carl@rhepa.com | +46 76 843 8803
EUROPEAN FUND MANAGER INSIGHTS 2021 | Apr 2021
www.hedgeweek.com | 17
