29/06/2011 Author: Will Wainewright

Gaim on

HFMWeek joined over 700 delegates in Monaco last week for Gaim, the must-attend event of the European hedge fund calendar, and found managers in a cautious but upbeat mood as they hunted for new business and debated a range of industry issues

For many in the hedge fund industry, this year’s Gaim International conference in Monte Carlo came at an opportune time – what better way to forget about May’s poor performance than a few days on the French Riviera? But the gathering at the plush Grimaldi Forum was about more than yachts and drinks receptions, although they played a part. All delegates had a set target, whether managers seeking investment, investors and seeders looking for funds or service providers hoping to win new business.

Much of the pre-conference talk had focused on the mixed performance of the last year, which, added to by May’s mostly poor performance, meant few entered the conference feeling complacent. However, with inflows remaining respectable, most managers in Monaco seemed upbeat, backing their prospects in the long term.

Though attendance figures were not made available to HFMWeek, consensus seemed to be that though numbers were healthy, they remained some way off pre-crisis levels. The main conference hall, where fund admins, domiciles and other providers competed for managers’ attention, felt full on the first day but tailed off after that. As one exhibitor said: “I came four years ago and it was much busier... You had to queue for the food then.”  

However, it is important to note that much of the important business will have taken place well away from the stalls and debates of the Grimaldi. The savviest providers, having first paid tens of thousands of pounds to exhibit in the main hall, spent many more times that on events and drinks receptions elsewhere in the city. For most, the conference’s key attraction lies in the ‘face-time’ opportunities it provides. For instance, HFMWeek spoke to two fund managers who had approached Rusty Guinn of Texas Teachers Retirement Scheme, a $105.7bn pension, following his appearance in debates. Such direct contact time between managers and potential investors is rare and immensely useful to both sides.

Conference sessions had it all: from Ucits to growth in China, seeding to the AIFM Directive, enough issues were covered to sate the appetite of the pickiest fund manager. The industry’s recognisable names were out in force, with Man Group CEO Peter Clarke, Hugh Hendry of Eclectica and Armajaro’s Anthony Ward leading the field on the main stage.

As this issue’s page four graphic reveals, the familiar themes of attracting investment and regulation led the agenda, along with sub-discussions on hedge fund size and the Greek debt crisis. Other major macroeconomic issues such as China and inflation also provided considerable food for thought for the major macro funds, who have endured a dismal few months. Liquidity was a recurring theme, with veteran hedge fund manager Nicholas Walker sounding a warning during the Ucits discussion that, in his experience, increased liquidity harmed long-term returns. In a separate discussion, Eclectica’s Hendry argued the opposite, saying investing in hedge funds that have gated in the past was a bad idea.

A wide range of investor issues were debated at length, with reprentatives from Brazillian pension funds Banasprev and Fundo Real Grandeza providing interesting insights from the South American perspective on the second day. Guinn, a portfolio manager at Texas TRS, spoke in two panel discussions and urged hedge fund managers to be less general in their approaches. “If you don’t customise your approach to the needs of the investor, it will probably get ignored,” he said. “Do a little bit of research and you will get far further.” He revealed around a third of TRS’s investments came from direct approaches and targeted pitches from managers.  

Guinn took part in a debate on hedge fund size, saying he preferred smaller, more boutique asset managers in theory – a recurring theme of the conference. He did, however, admit TRS’s biggest relationship was with Bridgewater; for him, the downside of smaller funds was that a standard TRS investment would keep many of them in business, putting him in a difficult position when it came to investment decisions and possible terminations.

Other investors were put off smaller funds by operational shortcomings in terms of due diligence, and some were wary of newer funds with limited track record. Despite these factors, a move away from bigger macro funds was a discernable trend of the conference, perhaps due to their recent losses and market exposure in volatile conditions.

Away from the debating halls there was business to be won. Speed networking events and quick- fire fund showcases threw managers and investors together in the exhibitor space, drawing crowds in the process, while the innumerable dinners and drinks receptions elsewhere provided further opportunities.

Whoever thought it was a good idea to showcase Bernie Madoff’s yacht, ‘Bull’, to delegates should probably be out of a job – the pain is still raw for many in the industry and some did not see the funny side. However, the conference proved a useful exercise for the overwhelming majority of delegates, who will be hoping they have picked up enough new ideas – and business – to boost performance over the next few months.

TWEET DECK
twitter.com/hfmweek
A selection of HFMWeek’s Twitter updates from across the three-day event

Tues 21 June
10.40pm Blind date for #hedgefunds underway in Monaco.

11.41pm Great comment from FoHF audience member on small private equity funds “It’s nice to say someone else’s business model is dying too” #gaim11

12.14pm Man Group’s Peter Clarke (right) heads up panel on aligning strategies to investor appetite #gaim11

Weds 22 June
10.15am Attendance in #gaim11 main hall sparse to say the least - managers may be ‘masters of the universe,’ but can’t beat hangovers, it seems.

10.54am Bernard Oppetit of Centaurus on managed accounts: “It seems to be where the money is now, frankly.” #gaim11

6:42pm Cracking setting for the #gaim11 drinks reception along the coast from the Grimaldi. Seems crowd here is larger than one in hall today...

Thurs 23 June
12.27pm York Group’s Nicholas Walker - with 40 years trading behind him - “Restricted liquidity is important for long term returns.” #gaim11