Alternative investments
Alternative investments
Nicolas Campiche, Jean-Pierre Selvatico Reaching Higher Ground The Hague 2011
Agenda 1.
Introduction
2.
Recent trends
3.
2010 in review
4.
Looking ahead to 2011
Reaching Higher Ground
Alternative Investments
2
1 Introduction
Reaching Higher Ground
Alternative Investments
3
Pictet Alternative Investments key statistics People
A distinct investment philosophy
Senior management
2
Investment professionals HF
15
Investment professionals PE
5
Operations
6
Total
RISK AVERSE
People before processes
43
Performance
INDEPENDENT MINDS
HUMAN CAPITAL
Diversified sources of risk
15
Support
Alignment of interest
Thorough understanding of investment processes
LONG TERM
Farming new talents
High convictions
BOTTOM-UP
True partnerships through continuity
AUM in USD bn
Hedge funds1 Net annualised return
7.4%
Net annualised volatility
6.0%
Private equity
We take risks we understand
2
Hedge funds Private equity
12
AUM in USD bn Net flows in USD m
10 8 6
Net IRR
22%
4
TVPI
1.5x
2
8.9
2.0
+450
+171
0 2004
2005
2006
Hedge Fund
2007
2008
2010
Private Equity
Annualised return of the P share class of Mosaic Fund in USD, net of all fees, as of 31.12.2010 2 Performance on all discretionary mandates, including funds and co-investments, as of 30.09.2010
Source: Pictet Alternative Investments, as of 31.12.2010
Reaching Higher Ground
Alternative Investments
1
2009
4
Pictet among the top 20 fund of hedge funds players Funds of hedge funds by AUM in USD bn Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Blackstone Alternative Asset Management HSBC Alternative Investments UBS Global Asset Management A&Q Grosvenor Capital Management Goldman Sachs Asset Management Permal Investment Management BlackRock Alternative Advisors Morgan Stanley Pacific Alternative Asset Management Co. Lyxor Asset Management GAM Multi-Manager Union Bancaire Privée Man Investments Mesirow Advanced Strategies Aurora Investment Managements Credit Suisse Amundi Alternative Investments (1) K2 Advisors Financial Risk Management Pictet & Cie The Capital Holdings Funds/LCF Rothschild Gp Gottex Fund Management Arden Asset Management Fauchier Partners EIM
31.12.10 32.9 28.0 27.6 24.0 22.3 21.6 18.9 18.4 16.6 16.0 14.2 14.0 13.9 13.6 10.5 10.4 9.7 9.4 9.3 8.8 8.5 8.3 7.9 7.9 7.5
Note: Only 50 first funds of hedge funds over USD 1bn are shown on a total of 109 Source: HedgeFund Intelligence, as of 31.12.2010
Reaching Higher Ground
Rank 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
01.01.10 27.9 23.3 28.0 22.5 20.2 19.4 17.2 14.1 16.2 17.7 17.0 18.0 15.6 12.0 9.5 13.0 12.8 8.0 8.5 8.4 6.2 8.1 7.9 7.1 8.7
Alternative Investments
// (1) (2)
JP Morgan Alternative Asset Management Notz, Stucki & Cie SkyBridge Capital Silver Creek Capital Management Rock Creek Global Aberdeen Asset Management (2) Banca del Ceresio Group Axa Investment Managers Entrust Capital Aetos Capital Prisma Capital Partners BlueCrest Capital Management Harcourt Investment Consulting The Archstone Partnerships LGT Capital Partners Lighthouse Partners Common Sense Investments Crestline Investors InvestCorp Asset Management BNY Mellon Asset Management NB Alternative Investment Management NewFinance Capital Stenham Asset Management Sciens Capital Management Unigestion Total (109 funds)
31.12.10 7.3 7.0 6.9 6.7 6.5 6.4 6.3 5.8 5.4 5.4 5.3 5.3 4.8 4.7 4.7 4.5 4.2 4.1 3.9 3.8 3.7 3.7 3.7 3.6 3.6
01.01.10 7.5 7.5 6.1 7.2 5.4 6.7 5.8 5.1 4.2 4.7 4.1 3.3 4.5 4.5 4.5 4.6 4.1 3.8 2.9 2.6 3.5 2.7 2.7 4.4 3.1
624.9
596.2
Formerly Crédit Agricole Asset management Alt. Inv. Formerly RBS Asset Management
5
Navigating through crises & blow ups Performance since inception of Mosaic
Years 19941
Mosaic-P -3
MSCI World TR 1.1
1995
14.5
20.7
1996
14.8
13.5
1997
15.7
15.8
1998
-2.7
24.3
280
1999
13.8
24.9
260
2000
4.6
-13.2
2001
6.8
-16.8
240
2002
1.5
-19.9
2003
12.2
33.1
200
2004
9
14.7
180
2005
9.3
9.5
160
2006
13.2
20.1
2007
17.4
9
140
2008
-15.5
-40.7
2009
11.2
30
100
2010
5
11.8
80
20112
1.1
5.8
340
Sub prime
320
Mosaic P
MSCI World TR
300 Tech Bubble Russian Debt Default
220
WorldCom Enron 9/11
Asian Crisis
Madoff
Interest rates
Jun 10
Jun 09
Jun 08
Jun 07
Jun 06
Jun 05
Jun 04
Jun 03
Jun 02
Jun 01
Jun 00
Jun 99
Jun 98
Jun 97
Jun 96
Jun 94
120
Jun 95
Annual net returns in USD, %
Source: Pictet Alternative Investments 1 Inception date: 31.05.1994 2 Estimates as of 28.02.2011
Reaching Higher Ground
Alternative Investments
6
PAI funds of hedge funds
1
Strategy
Launch
Size2 in million
Mosaic
Concentrated ~30 Funds
May 1994
USD 1’177
LIBOR3 +3-5%
5-7%
June 2007
EUR 321
LIBOR3 +3-5%
5-7%
November 2005
USD 1’603
LIBOR3 +2-3%
4-6%
February 2011
EUR 47**
LIBOR3 +2-4%
6-8%
June 1998
USD 726
LIBOR3 +3-5%
5-7%
Fund
Global multi strategy
Mosaic Euro* Pleiad Pictet Select - Callisto
Thematic multi-manager
Mosaic Trading
Concentrated ~30 Funds Diversified ~80 Funds UCITS III Concentrated ~20 Funds Trading Strategies ~30 Funds
World Equity Hedge
Global Equity Long/Short ~30 Funds
April 2009
USD 341
Discretionary mandates
Client driven
-
Min USD 20
Advisory mandates
Client driven
-
Min USD 20
Customised mandates
Performance objective
Volatility objective
To achieve global equity market-like returns with much lower volatility To achieve client’s targeted objectives, usually aligned to bespoke products To achieve client’s targeted objectives. Client takes the ultimate investment decision
Source: Pictet Alternative Investments Funds are Luxembourg domiciled SICAV Part 2. Pictet Select – Callisto is a SICAV Part 1. Management fees: I share class in reference currency: 1.15% p.a. No performance fee ¹ Mosaic Euro, Pleiad and World Equity Hedge are compartments of the Pictet Alternative Funds (PAF) umbrella 2 As of 31.12.2010 3 3-Month USD LIBOR * PAF-Mosaic Diversified became PAF-Mosaic Euro in November 2009; the reference currency of the fund changed from USD to EUR. ** As of 28.02.2011
Reaching Higher Ground
Alternative Investments
7
2 Recent trends
Reaching Higher Ground
Alternative Investments
8
Recent trends Hedge fund industry growth in 2010 •
Net inflows + USD 55bn
•
Q4 Largest quarterly AUM increase in history Since Q4 2009, there have been more funds created than liquidated
1,500
170
Industry AUM at all time high
1,000
120
-131
-154
55
195
126
47
74
71
99
-500
20 -30 -80
2010
2009
-180 2008
-1,500 2007
-130 2006
-1,000
2005
Majority of inflows comes from US institutions
0
2004
80% of inflows going to largest funds in 2010, but this trend may be reversing
70
500 47
7’164 hedge funds (vs. 7’634 in 2007)
220
2003
•
270 2,000
2002
•
Flows
Historical AUM
2,500
2001
•
Historical Net Asset Flows
23
•
AUM
2000
•
Hedge fund industry, in USD bn
Source: Pictet Alternative Investments, HFR Q4 2010 Industry Report, as of 31.12.2010
Reaching Higher Ground
Alternative Investments
9
Recent trends
AUM
Q1: USD -12bn
•
Q2: USD -2bn
•
Q3: USD +0.3bn
400
•
Q4: USD +1.8bn
200
59
-12
-118
-41
50
10
33
59
18
7
103
0 -50
-400 -600
-100
2010
-1,000
2009
-800 2008
HDF?
-200
2007
•
0
2006
Olympia (Richmond Park Capital)
50
2005
•
100
600
2004
Consolidation likely to continue
800
2003
PAI USD 0.5bn
150
2002
•
Flows
Historical AUM
1,000
•
Only 32% of FoHF registered net inflows
Historical Net Asset Flows
2001
Net flows USD -12 bn
Fund of funds historical asset flows and growth, in USD bn
2000
Fund of hedge fund industry consolidation in 2010
-150
Source: Pictet Alternative Investments, HFR Q4 2010 Industry Report
Reaching Higher Ground
Alternative Investments
10
Three trends to manage risk & transparency requirements PAI has selected these two options to respond to clients needs (Pictet Select - Callisto)
UCITS > 500 active UCITS funds Superior growth to the average with approx. EUR 100 mm today and net new money forecasts of EUR 135 mm in 2011
Reference data risk provider Acquired Measurerisk in July 2010 Approx. 2’000 funds on the platform by mid-2010 Growth of close to 50 funds per month
Managed accounts 12.0 100 fonds
10.0 5.0
3.0
1.7
Reaching Higher Ground
Alternative Investments
70 fonds 50 fonds 54 fonds
Restricted universe (
Nicolas Campiche, Jean-Pierre Selvatico Reaching Higher Ground The Hague 2011
Agenda 1.
Introduction
2.
Recent trends
3.
2010 in review
4.
Looking ahead to 2011
Reaching Higher Ground
Alternative Investments
2
1 Introduction
Reaching Higher Ground
Alternative Investments
3
Pictet Alternative Investments key statistics People
A distinct investment philosophy
Senior management
2
Investment professionals HF
15
Investment professionals PE
5
Operations
6
Total
RISK AVERSE
People before processes
43
Performance
INDEPENDENT MINDS
HUMAN CAPITAL
Diversified sources of risk
15
Support
Alignment of interest
Thorough understanding of investment processes
LONG TERM
Farming new talents
High convictions
BOTTOM-UP
True partnerships through continuity
AUM in USD bn
Hedge funds1 Net annualised return
7.4%
Net annualised volatility
6.0%
Private equity
We take risks we understand
2
Hedge funds Private equity
12
AUM in USD bn Net flows in USD m
10 8 6
Net IRR
22%
4
TVPI
1.5x
2
8.9
2.0
+450
+171
0 2004
2005
2006
Hedge Fund
2007
2008
2010
Private Equity
Annualised return of the P share class of Mosaic Fund in USD, net of all fees, as of 31.12.2010 2 Performance on all discretionary mandates, including funds and co-investments, as of 30.09.2010
Source: Pictet Alternative Investments, as of 31.12.2010
Reaching Higher Ground
Alternative Investments
1
2009
4
Pictet among the top 20 fund of hedge funds players Funds of hedge funds by AUM in USD bn Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Blackstone Alternative Asset Management HSBC Alternative Investments UBS Global Asset Management A&Q Grosvenor Capital Management Goldman Sachs Asset Management Permal Investment Management BlackRock Alternative Advisors Morgan Stanley Pacific Alternative Asset Management Co. Lyxor Asset Management GAM Multi-Manager Union Bancaire Privée Man Investments Mesirow Advanced Strategies Aurora Investment Managements Credit Suisse Amundi Alternative Investments (1) K2 Advisors Financial Risk Management Pictet & Cie The Capital Holdings Funds/LCF Rothschild Gp Gottex Fund Management Arden Asset Management Fauchier Partners EIM
31.12.10 32.9 28.0 27.6 24.0 22.3 21.6 18.9 18.4 16.6 16.0 14.2 14.0 13.9 13.6 10.5 10.4 9.7 9.4 9.3 8.8 8.5 8.3 7.9 7.9 7.5
Note: Only 50 first funds of hedge funds over USD 1bn are shown on a total of 109 Source: HedgeFund Intelligence, as of 31.12.2010
Reaching Higher Ground
Rank 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
01.01.10 27.9 23.3 28.0 22.5 20.2 19.4 17.2 14.1 16.2 17.7 17.0 18.0 15.6 12.0 9.5 13.0 12.8 8.0 8.5 8.4 6.2 8.1 7.9 7.1 8.7
Alternative Investments
// (1) (2)
JP Morgan Alternative Asset Management Notz, Stucki & Cie SkyBridge Capital Silver Creek Capital Management Rock Creek Global Aberdeen Asset Management (2) Banca del Ceresio Group Axa Investment Managers Entrust Capital Aetos Capital Prisma Capital Partners BlueCrest Capital Management Harcourt Investment Consulting The Archstone Partnerships LGT Capital Partners Lighthouse Partners Common Sense Investments Crestline Investors InvestCorp Asset Management BNY Mellon Asset Management NB Alternative Investment Management NewFinance Capital Stenham Asset Management Sciens Capital Management Unigestion Total (109 funds)
31.12.10 7.3 7.0 6.9 6.7 6.5 6.4 6.3 5.8 5.4 5.4 5.3 5.3 4.8 4.7 4.7 4.5 4.2 4.1 3.9 3.8 3.7 3.7 3.7 3.6 3.6
01.01.10 7.5 7.5 6.1 7.2 5.4 6.7 5.8 5.1 4.2 4.7 4.1 3.3 4.5 4.5 4.5 4.6 4.1 3.8 2.9 2.6 3.5 2.7 2.7 4.4 3.1
624.9
596.2
Formerly Crédit Agricole Asset management Alt. Inv. Formerly RBS Asset Management
5
Navigating through crises & blow ups Performance since inception of Mosaic
Years 19941
Mosaic-P -3
MSCI World TR 1.1
1995
14.5
20.7
1996
14.8
13.5
1997
15.7
15.8
1998
-2.7
24.3
280
1999
13.8
24.9
260
2000
4.6
-13.2
2001
6.8
-16.8
240
2002
1.5
-19.9
2003
12.2
33.1
200
2004
9
14.7
180
2005
9.3
9.5
160
2006
13.2
20.1
2007
17.4
9
140
2008
-15.5
-40.7
2009
11.2
30
100
2010
5
11.8
80
20112
1.1
5.8
340
Sub prime
320
Mosaic P
MSCI World TR
300 Tech Bubble Russian Debt Default
220
WorldCom Enron 9/11
Asian Crisis
Madoff
Interest rates
Jun 10
Jun 09
Jun 08
Jun 07
Jun 06
Jun 05
Jun 04
Jun 03
Jun 02
Jun 01
Jun 00
Jun 99
Jun 98
Jun 97
Jun 96
Jun 94
120
Jun 95
Annual net returns in USD, %
Source: Pictet Alternative Investments 1 Inception date: 31.05.1994 2 Estimates as of 28.02.2011
Reaching Higher Ground
Alternative Investments
6
PAI funds of hedge funds
1
Strategy
Launch
Size2 in million
Mosaic
Concentrated ~30 Funds
May 1994
USD 1’177
LIBOR3 +3-5%
5-7%
June 2007
EUR 321
LIBOR3 +3-5%
5-7%
November 2005
USD 1’603
LIBOR3 +2-3%
4-6%
February 2011
EUR 47**
LIBOR3 +2-4%
6-8%
June 1998
USD 726
LIBOR3 +3-5%
5-7%
Fund
Global multi strategy
Mosaic Euro* Pleiad Pictet Select - Callisto
Thematic multi-manager
Mosaic Trading
Concentrated ~30 Funds Diversified ~80 Funds UCITS III Concentrated ~20 Funds Trading Strategies ~30 Funds
World Equity Hedge
Global Equity Long/Short ~30 Funds
April 2009
USD 341
Discretionary mandates
Client driven
-
Min USD 20
Advisory mandates
Client driven
-
Min USD 20
Customised mandates
Performance objective
Volatility objective
To achieve global equity market-like returns with much lower volatility To achieve client’s targeted objectives, usually aligned to bespoke products To achieve client’s targeted objectives. Client takes the ultimate investment decision
Source: Pictet Alternative Investments Funds are Luxembourg domiciled SICAV Part 2. Pictet Select – Callisto is a SICAV Part 1. Management fees: I share class in reference currency: 1.15% p.a. No performance fee ¹ Mosaic Euro, Pleiad and World Equity Hedge are compartments of the Pictet Alternative Funds (PAF) umbrella 2 As of 31.12.2010 3 3-Month USD LIBOR * PAF-Mosaic Diversified became PAF-Mosaic Euro in November 2009; the reference currency of the fund changed from USD to EUR. ** As of 28.02.2011
Reaching Higher Ground
Alternative Investments
7
2 Recent trends
Reaching Higher Ground
Alternative Investments
8
Recent trends Hedge fund industry growth in 2010 •
Net inflows + USD 55bn
•
Q4 Largest quarterly AUM increase in history Since Q4 2009, there have been more funds created than liquidated
1,500
170
Industry AUM at all time high
1,000
120
-131
-154
55
195
126
47
74
71
99
-500
20 -30 -80
2010
2009
-180 2008
-1,500 2007
-130 2006
-1,000
2005
Majority of inflows comes from US institutions
0
2004
80% of inflows going to largest funds in 2010, but this trend may be reversing
70
500 47
7’164 hedge funds (vs. 7’634 in 2007)
220
2003
•
270 2,000
2002
•
Flows
Historical AUM
2,500
2001
•
Historical Net Asset Flows
23
•
AUM
2000
•
Hedge fund industry, in USD bn
Source: Pictet Alternative Investments, HFR Q4 2010 Industry Report, as of 31.12.2010
Reaching Higher Ground
Alternative Investments
9
Recent trends
AUM
Q1: USD -12bn
•
Q2: USD -2bn
•
Q3: USD +0.3bn
400
•
Q4: USD +1.8bn
200
59
-12
-118
-41
50
10
33
59
18
7
103
0 -50
-400 -600
-100
2010
-1,000
2009
-800 2008
HDF?
-200
2007
•
0
2006
Olympia (Richmond Park Capital)
50
2005
•
100
600
2004
Consolidation likely to continue
800
2003
PAI USD 0.5bn
150
2002
•
Flows
Historical AUM
1,000
•
Only 32% of FoHF registered net inflows
Historical Net Asset Flows
2001
Net flows USD -12 bn
Fund of funds historical asset flows and growth, in USD bn
2000
Fund of hedge fund industry consolidation in 2010
-150
Source: Pictet Alternative Investments, HFR Q4 2010 Industry Report
Reaching Higher Ground
Alternative Investments
10
Three trends to manage risk & transparency requirements PAI has selected these two options to respond to clients needs (Pictet Select - Callisto)
UCITS > 500 active UCITS funds Superior growth to the average with approx. EUR 100 mm today and net new money forecasts of EUR 135 mm in 2011
Reference data risk provider Acquired Measurerisk in July 2010 Approx. 2’000 funds on the platform by mid-2010 Growth of close to 50 funds per month
Managed accounts 12.0 100 fonds
10.0 5.0
3.0
1.7
Reaching Higher Ground
Alternative Investments
70 fonds 50 fonds 54 fonds
Restricted universe (
