PHILIPPE DE BEAUPUY, HEAD OF MANAGED ACCOUNT PLATFORM UK AT...

M A N A G E D A C C O U N T P L AT F O R M S 2 0 1 4 - 2 0 1 5
SOLUTION-DRIVEN APPROACH
PHILIPPE DE BEAUPUY, HEAD OF MANAGED ACCOUNT PLATFORM UK AT LYXOR, SPEAKS TO HFMWEEK ABOUT THE UNIQUE WAYS LYXOR IS USING
ITS EXPERIENCE IN MANAGED ACCOUNTS TO BRING INNOVATIVE SOLUTIONS TO INVESTORS
Philippe de
Beaupuy has been
head of managed account
platform UK at Lyxor Asset
Management since 2013. He
joined Lyxor in November
2006 as a senior hedge
fund analyst with a focus on
long/short equity strategies,
and was promoted to
deputy head of hedge fund
relationship in 2011.
1 2 H F M W E E K . CO M
HFMWEEK (HFM): What is
the background of managed accounts and how have you seen
the industry develop?
Philippe de Beaupuy (PB):
Since the 2008 financial crisis the
managed account landscape has
changed dramatically. In essence,
before the crisis it was fairly homogeneous. Most of the actors in
the space were roughly doing the
same thing, providing liquid access
to hedge funds. If I had to name
one positive aspect of the crisis it
is that it has brought to light the
benefits of managed accounts to
a wide range of investors. Over
the last years, the main driver of
growth has come from large institutions, namely pension funds, because their needs are broader and more complex as they
cannot compromise on risk management or transparency.
They require tailor-made solutions. Managed accounts
are the ideal solution to address such broad needs. On the
other hand, regulators have strengthened the framework in
which hedge fund managers can operate onshore. Regulated alternatives such as Ucits or ’40 Act have allowed both
the return of private banks and opened the way to new investors in liquid alternatives.
The main consequence of these somewhat barbell
trends is that the competitive landscape has become more
FOR US IT ALL STARTS
WITH THE INVESTOR.
OUR APPROACH IS TO
UNDERSTAND WHAT OUR
INVESTORS AIM TO ACHIEVE
WHEN INVESTING IN
HEDGE FUNDS
fragmented, with new entrants
focusing exclusively on specific
aspects of what managed accounts
can offer to investors, whether infrastructure or Ucits for instance.
Very few actors can offer fully
fledged investment solutions. Very
few can claim the breadth of experience and innovation, or the track
record of Lyxor.
HFM: What is Lyxor’s approach
to these new challenges and opportunities?
PB: For us it all starts with the
investor. Our approach is to understand what our investors aim
to achieve when investing in hedge
funds. This understanding allows
us to make the most of the wide
areas of expertise that we have developed over the years,
to bring the most adequate solution to our different investors. We look to build investment solutions rather than
push products.
”
HFM: How important is transparency to your managed account platform?
PB: Transparency is at the centre of everything that we
do. It starts with understanding what managers do. Assessing the drivers of performance and of alpha generation of hedge fund managers based on the actual positions
ASSET MANAGEMENT
and trades, both historical and current. It is also
at the core of our risk management framework
where we agree with managers on detailed investment limits to which they have to abide. Over the
16 years we have been building our expertise in
hedge fund strategies, we have had full transparency on more than 350 strategies. This is an amazing source of information at each individual fund
level but also on a transversal basis. It helps us
constantly improve our understanding of the key
drivers of risks and return in the alternative space.
This is the knowledge on which we want to leverage to the benefit of our investors. We enhance
such transparency in both a quantitative and a
qualitative manner. Our goal is to allow investors
to make better informed investment decisions.
Quantitatively, we have developed a stateof-the-art web portal where investors can have
access to detailed risk and performance metrics
at regular intervals on the strategies they are invested in. These metrics are obviously accessible at each
fund level but also on an aggregated basis at the level of
their portfolio. Take the example of a large pension fund
looking to increase its exposure to hedge funds. Liquidity might not be the main driver in their decision to adopt
the managed account route but segregation of assets, independent valuation, risk management and transparency
most definitively will be. More importantly, such detailed
transparency in a standardised manner allows them to stop
treating their hedge fund allocation as an outlier in their
overall allocation process.
Qualitatively, investors have access to a team of 15
strong hedge fund specialists organised by strategies, who
each have responsibility on a limited number of hedge
OVER THE 16 YEARS WE
HAVE BEEN BUILDING OUR
EXPERTISE IN HEDGE FUND
STRATEGIES, WE HAVE
HAD FULL TRANSPARENCY
ON MORE THAN 350
STRATEGIES
”
fund relationships. They know the strategies insideout and understand the positioning of managers at
all time.
When it comes to the managed account set-up
and specifically regarding transparency, we apply
the same institutional standards in everything that
we do whether we are advising a large pension fund
on a dedicated basis or designing Ucits compliant
mandates with hedge fund managers.
HFM: What trends do you foresee for managed
accounts in the future in which Lyxor will be
specifically active?
PB: I would like to mention two; the first one is the
direct continuation of what we have been able to do
for institutions in the hedge fund space, by allowing
them not to treat their hedge fund exposure as an
outlier in their overall allocation process. We are increasingly having discussions of hybrid nature with
investors; hybrid in the sense that their thought
process is breaking the historical border between alternative and traditional investments.
The second trend is linked to the fact that managed accounts are a wonderful tool to negotiate the scope of the
mandate with a hedge fund manager. It is obviously true
when it comes to fees, cash management, liquidity or SRI
requirements for instance. Going forward we are seeing
the need from investor to go one step beyond and leverage
on Lyxor’s experience to hire managers to help them participate to specific investment opportunities. Dedicated
managed accounts to dedicated investment opportunities. The deep understanding we have developed on the
industry is a great asset in helping our investors achieve
this goal. Q
H F M W E E K . C O M 13
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