Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
AFF ramps up good deeds, puts the spotlight back on alts managers
The Alternative Future Foundation (AFF), responsible for the annual Hedge Funds Rock charity event, is looking to ramp up its charitable efforts while spreading the good word about Australia’s alternative investment industry.
“Because the industry is so broad, alternative investing can mean everything from long/short equities and macro trading to cryptocurrencies and managed futures,” Kim Ivey, AFF chairman, tells ISN. “You have this wide gamut of interesting things, and it’s hard to pick up all of them in just one event.”
“And because there’s so much interest in managers it’s been left up to private and commercial interests to bring out what’s interesting with alternative managers, and the same thing goes for investor segments – whether it be super funds., HNW, family offices.”
It ultimately hopes to create its own version of Hedge Fund Week – which takes place annually in Miami, New York and London – Down Under, with the first stepping stone a family office invitational day to be held in Sydney next week. AFF hopes other organisations will eventually get involved in the festivities; it’s underwriting the first event and is leaning on the manager data that it’s collected by hosting Hedge Fund Rocks to fuel the expansion.
“Through the event, we collect and monitor and assess an enormous amount of data on the industry and on managers every year, the judging panel,” Ivy says. “There’s intellectual capital that’s been built up over 20 years about the industry. The questioned was posed by one of the trustees that ‘Who better to comment and make some observations about the industry than the foundation?’. We have this great knowledge base; let’s try and put it to good use.”
While the advent of higher interest rates and inflation fuelled hopes for a resurgence in the use of hedge funds by Australian institutional investors, their interest has mostly been focused on alternatives like private debt and infrastructure. Meanwhile, family offices have emerged as innovative investors willing to take a chance on emerging managers that super funds no longer can or will, and Ivey says that “fantastic themes and ideas” are now coming more from the growing family office investor base than big institutions.
“What the foundation is trying to do is create a better-informed and better-educated knowledge base about the alternative investment industry,” Ivey said. “We’ve taken what we know about managers, what we know about strategies and what we know about investors… We find and can see interesting things that are being done.
“There are so many good managers in Australia and we do sense that many of them are hidden for want of better marketing and PR and business development. There are interesting people doing interesting things and producing good numbers – why not create a forum or events that aren’t about selling or jargon but having good, sophisticated conversations with these managers?”
