Hedge Fund Intelligence Sir Michael Hintze interview | Página 4

interview
mandates, where we are providing an alpha-generation solution for
clients; and this is where we see the greatest growth.

>> If we want to take risks in various parts of our

business, we need to have a very strong control
function. That goes back again to operations. But
it’s more than just a risk function; it’s the ability
to understand on a daily basis what the P&L is >>

Q

  lthough it sounds like a cliché, it also reflects the growing
A
institutionalisation of the business?

MH Very much so. To be effective, you have to have strong and
repeatable processes. For example, we now have allocation committees
in the long-only credit asset space.

Q

  o the bespoke solution is now a major growth area?
S

MH Yes. We’ve been active on this front for sovereign wealth funds,
family offices, pension funds and endowments.

Q

 s it possible to give some idea of how much
I
it represents?

MH Approximately 25% or $2.9 billion of our assets under
management.

you partner with is very important – not only from a distribution
standpoint – but also from a compliance and regulatory perspective.

Q

 In your last issue of Insight, you stated that: “We have held

a constructive view on the markets for some time… it is
now time to be more balanced because a number of factors
have changed.” How does this relate to your views of the
key markets now?

MH Correct. Our sales and client service team is pretty big – it’s well
over 20 people. But again, you need specialists as well as generalist
relationship managers.

MH There is less room for error being built into these markets, and I
think the opportunity for things to go wrong is higher. That gives us
the opportunity to extract value from ‘air pockets’. That’s one of the
reasons that why we’re being more balanced.
That said, overall I am still constructive on the markets.
QE, despite talk of tapering, is still quite significant. For example,
the Fed balance sheet is still expanding and there is no talk about
it contracting. It went from $800 billion in 2007 to around $3.5
trillion today and that’s against the background of a $16 trillion
economy.

Q

Q

Q

  his development must create much greater demands in terms
T
of client service?

  nd when you refer to specialists, are you speaking about
A
product specialists?

MH That’s right. So we have product specialists for various
strategies such as the ABS, convertibles, credit and Directional
Opportunities funds.

Q

  ou have also created partnerships with distribution platforms
Y
such as Schroders and JP Morgan Mansart.

MH We have good partnerships with both of them. They enable us
to reach investors who we wouldn’t normally get to and we provide
them with an alternative product that has been carefully thought
through and meets the appropriate liquidity requirements. We are
also looking at further building out the ’40 Act funds business,
which represents a big growth area for the industry going forward.
It’s similar to the creation of UCITS funds in Europe.

Q

 t was recently reported that you are acting as a sub-adviser for
I
Arden. So is this an area you could see expanding quite fast?

MH Broadly, the ’40 Act area presents a great opportunity for us to
partner with top-tier firms as we have done in Europe with UCITS.
What we have learned from our UCITS experience is that who

© HedgeFund Intelligence

  couple of years ago, you were very concerned about inflation
A
due to all the quantitative easing that was taking place. Do you
still worry about a rise in inflation?

MH There is always the risk that inflation could pick up. The
monetary base has risen significantly, but presently, the velocity of
money is still low.
In the current global environment, it is unclear whether you will
wind up getting wage push inflation. I think that’s because there is an
element of labour mobility around the world. What is clear to me is
that there is a lot of money out there and more of it appears to be
going into assets, rather than into the real economy. Let’s not forget,
you can have a good market and a lacklustre economy.
I am constructive about the US economy. The housing market
is improving and the banking system can once again expand its
balance sheets. There is also cheap energy and cheap water in the US.
That’s positive news.
Then you have Europe, which is distinct but definitely not separate. Again, [president of the European Central Bank] Mario Draghi
seems to have done a very good job of kicking the can down the road.
They still haven’t dealt with a number of key issues such as
the fiscal probity of some of the countries in the Eurozone. I’ve
been particularly worried about France, because I don’t think the
monetary authorities have France on their radar in the same way as
they have with some peripheral countries. The Eurozone will stick
together in the immediate future – there is no question about that

Autumn 2013 Global Review 37