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Advantageous Positioning Transparent and Regulated Wrapper for Portfolio Management Products

Advantageous Positioning Transparent and Regulated Wrapper for Portfolio Management Products

10 11 SPONSORED Q&A

Amundi Alternative

Sylvie Dehove, head of For me, the main difference AIFMD will bring is that the AIF is definitely a secured, strategy and Advantageous positioning transparent and regulated wrapper for management products. It will allow me to concentrate more FUNDS REVIEW: Is the for a more regulated, transparent vehicle, on my main bets and my main convictions. at Alternative introduction of the Alternative pretty much in line with the move to more I do think that the differentiation Investments, talks about Managers Directive regulatory requirements under Basel III, could come from higher conviction bets (AIFMD) going to be a challenge or will it Solvency II, and so on. In Europe, for sure, or discretionary investments – as opposed the implications of the bring opportunities to hedge funds? that can make a difference. more diversified . introduction of European Sylvie Dehove: We expect it to generate Prior to that, alternatives were not part of Union regulations on the a lot of opportunity for us. An optimistic the core portfolios of European institutions. HEDGE FUNDS REVIEW: With regard person is definitely someone that sees It was not something that you would say to to wanting to see a good hedge fund industry and opportunity, even amid difficulties. We your respective boards – to invest in hedge return profile, do you think the directive how Amundi is positioning wanted to be optimists as far as the AIFMD is funds. It was something pretty insignificant is going to be helping hedge funds to concerned, mainly because it brings a lot of at the back of your portfolio. product that kind of performance, or is it itself in relation to the flexibility in terms of investment guidelines, The AIFMD will definitely allow European going to be immaterial? changes and fewer constraints in terms of institutions to say clearly to their boards Sylvie Dehove: Again, for me, it’s definitely concentration and selling. that they want to invest in these vehicles for the framework. Will that change the At the same time, through the operational their core portfolios – because now they are performance? I don’t think so. The hedge set-up there will be extra layers of secured, transparent and regulated. So we fund manager is definitely an alpha protection. The combination of the two will expect a lot of flows from that side. generator and that is reflected in the definitely bring opportunities because, as a For our Asian clients, if we see a parallel performance, as well as in production. , I will be able to focus on between the fantastic success of Ucits and those providers are mainly European, and HEDGE FUNDS REVIEW: If you have The main reason we select managers is for . It is definitely an opportunity. the expected success of the AIFMD brand, are therefore already part of the discussions the managed account platform, and it is alpha generation. we expect that to be a new way to invest for about the AIFMD, will help. AIFMD-compliant, what does that bring Being part of an AIFMD or a Cayman HEDGE FUNDS REVIEW: How has Amundi them. Let’s say Ucits for -only traditional I expect managed account platforms to to the party? Does that give an Islands/ structure will not change been changing in light of AIFMD? How investments and AIF products for alternatives. help the AIF brand to expand and to ease the anything extra? anything for the hedge fund manager. are you changing the way you advise learning curve for US managers and non- Sylvie Dehove: It’s total because It is still a way to generate performance, clients and construct portfolios for them HEDGE FUNDS REVIEW: How long do European hedge fund managers in general. on one side you have the protection given but within a framework that will comfort following the introduction of the directive? you think it is going to take to establish It may help them to launch passportable by the platform, due diligence, operational investors, especially European ones, and Sylvie Dehove: I do not think that the AIFMD the brand? funds before 2018 [when due diligence, and so on, and you have the allow them to bring these funds into their will change things. It’s a European framework, Sylvie Dehove: It will be highly dependent may end with the introduction of a passport extra protection provided by an operational core portfolios. So we expect flows to come it’s just creating the environment in which we on the appetite of hedge fund managers to for third country funds]. In the short term, set-up thanks to the AIFMD. The mix, the into the industry. will invest. The way I manage a portfolio is a create products under the AIFMD. It will definitely, managed accounts will be AIFMD- combination of the two is like a super combination of discretionary style, and non- depend on the regulators and how flexible compliant and will be an easier way for protection wrapper. That’s the reason why HEDGE FUNDS REVIEW: With the discretionary – a model I’m using in order they will be with licensing, and so on. At managers to distribute products. managed account providers want to be introduction of the directive, do you think to challenge my expectations and my views. the very beginning that could be a bit slow, In the medium term, as a portfolio AIFMD-compliant as soon as possible European investment into hedge funds AIFMD will not change the way I manage. a bit tepid. But I expect managed accounts manager, I tend to use managed account is going to significantly change? Will we What has definitely changed is that the platform providers, in the short term, to help liquidity, especially weekly ones, for specific HEDGE FUNDS REVIEW: How do you see a trend to more investment into these extra layer of protection it has brought to the AIFMD to come into favour. We have had a lot bets. It’s complementary to my main or see your role in helping clients put vehicles and, as a consequence, Amundi’s fund (AIF) product of discussions about that with our own hedge core allocations. With weekly liquidity, for together portfolios and strategies that go own significantly rise? allows me to be more concentrated. This fund managers; they want to bring funds onto a risk-off environment, managed accounts beyond just equity long/short into a more Sylvie Dehove: We expect to have means I can have high conviction positions the platform. The trend is for the AIF. work well. For a risk-on environment, diversified, broader strategy mix? significant inflows linked to AIFMD. We with skilled managers and within portfolios. If we take Ucits as a model, it could take when you want to take directionality, you’re Sylvie Dehove: Amundi Alternative had a lot of discussion with our clients; We were pretty much diversified at the two years for a doubling of the assets. Then seeking a lot of yield, then you tend to try Investments has been managing fund of we explained to them about the AIFMD. I fund of funds level. Now, the AIFMD allows we will see. to capture the liquidity premiums. Then it funds for more than 20 years. We manage anticipate [these clients] to be able to invest us to go up to a 7% or 10% concentration, doesn’t matter if you have monthly liquidity. close to $7 billion, mainly through client through AIFMD vehicles. depending on the mandate and if the client HEDGE FUNDS REVIEW: Amundi runs That is sufficient. mandates. We’re very familiar with strategic We also expect some new trends. It will is fine with that. It definitely allows us to be a large managed account platform. Do In the medium term, I think managed allocation. Through AIFMD, I will advise be a matter of how providers of these funds more focused on our convictions. you see that growing? Do you think there accounts providing weekly liquidity will my clients pretty much the same way in terms discipline themselves in order to operate will be more or less demand for managed probably be depressed, but monthly separate of strategy because AIF, compared to Ucits, within the European framework. HEDGE FUNDS REVIEW: Do you think the accounts because of the AIFMD? accounts will probably keep on attracting allows us to have all the alternative strategies, More formal regulation is the current directive is going to encourage European Sylvie Dehove: Historically, managed money, especially if those providers tend to including distressed, available for our clients. trend and that will bring more responsibility investors to start putting more money into account platforms were a way of providing have fewer sell-side platforms, but many The top-down approach will not change. within our industry. Yes, I expect that to be a alternatives, and specifically hedge funds? liquidity for hedge funds. I think what more buy-side platforms focusing on big We will continue strategic . We great opportunity. Sylvie Dehove, head of & Sylvie Dehove: We have seen a lot of will be key is definitely the fact that most names and skilled managers, within a will challenge our discretionary view with portfolio management , Amundi Alternative demand from clients, especially continental managed account providers wish to become European vehicle, providing a double-digit – more tools that we have developed internally, To view the full recorded proceedings of the Investments European institutions. They are asking AIF-compliant very quickly. The fact that or at least very attractive – risk return profile. a correlation metric. Q&A, visit: www.risk.net/2285357