12/08/2009 Author: Elana Margulies

Crédit Agricole turns to managed accounts

Crédit Agricole’s $637bn asset management subsidiary, Crédit Agricole Asset Management (Caam), is expected to migrate its fund of hedge funds (FoHF) product range to managed accounts, HFMWeek has learned.

According to a source familiar with its plans, Caam’s $14bn (as of end 2008) FoHFs, managed by Caam Alternative Investments (Caam AI), may have the option of allocating to managers on Caam’s existing managed account platform, which is part of the $48.2bn Crédit Agricole Structured Asset Management (Casam). Alternatively, according to the source, the FoHF will have the chance to invest in hedge funds outside the Casam platform, giving the FoHFs access to other managers. This could include the likes of Lyxor Asset Management and Deutsche Bank’s managed accounts.

Caam AI and Casam are both part of Crédit Agricole Asset Management Group. Casam had 81 funds on the platform and managed $2.1bn at the end of 2008.

The transition to managed accounts is anticipated to take place at the end of this year or early next year, and follows, most notably from Union Bancaire Privee’s (UBP) decision to convert at least 70% of its underlying hedge fund investments into highly liquid managed accounts, reported first in HFMWeek (issue 155).

The industry has experienced a well-documented shift toward managed accounts as investors respond to losses suffered in 2008. “Managed accounts offer the investor as well as the investment manager greater liquidity and more transparency and should alleviate the risk of theft,” said Stuart Garawitz, founder of Clear Theory Capital. Among managers that have already transitioned to managed accounts, HFMWeek reported that Ferrell Capital, a Connecticut-based FoHF manager, was converting its FoHF portfolio into a fund of managed accounts to provider greater transparency to its underlying hedge fund managers.

Crédit Agricole and Société Générale have recently finalised an agreement to combine their asset management operations, which will bring combined assets under management to $853bn. In January, the two banks announced that Caam Group would be consolidated with the European and Asian activities of Société Générale’s asset management business (SGAM), as well as 20% of TCW, its asset management subsidiary in the US.

However, Lyxor Asset Management, Société Générale’s managed account platform, and Societe Generale Asset Management Alternative Investments (SGAM AI) will remain within Société Générale and will not be part of the consolidated asset management unit of Credit Agricole, instead remaining part of Société Générale. The Lyxor-managed account platform managed $14.1bn in assets under management in 2009 and SGAM AI managed €4.9bn at the end of 2008.

Caam AI’s largest FoHF, its $1bn Green Way Arbitrage fund, an arbitrage-dedicated strategy that launched in July 1999, is up 8.85% YTD through June, according to data provided to BarclayHedge. Last year, it returned -33.84%. Meanwhile, its oldest FoHF, the nearly $600m Green Way Limited fund, a diversified offering that rolled out in March 1996, is up 4.64% YTD though June following its -23.71% return in 2008.