Capital Holdings Funds leads with 10 FoHF performance awards over last decade

July 07, 2014  

Permal tops the InvestHedge rankings with 51 award nominations

By Niki Natarajan and Siobhán Hallissey

  Rick Sopher
The Capital Holdings Funds, famed for running the oldest fund of hedge funds in the world, Leveraged Capital Holdings, tops the rankings of InvestHedge Fund of Hedge Fund Award winners with 10 gongs won over the past 11 ceremonies. The firm, run by Rick Sopher, also scoops kudos for garnering 30 nominations for one-year performance and 49 in total, when the longer-term awards are taken into consideration.

Since the first InvestHedge Awards in March 2003 held at the New York Public Library there have been a total of 1,300 funds of hedge funds nominated for awards, with 769 nominated on a one-year risk-adjusted basis and 531 for longer-term awards.

In total, 93 firms have walked away with prizes over the past decade. Of these, there have been 545 one-year nominations and 365 longer-term nominations, giving a total of 910 nominations that have resulted in 236 winners. Persistent Edge Management and SSARIS Advisors have both won nine awards over the years, while Pinnacle Asset Management and Silver Creek Capital Management have walked away with eight each.

The eight-strong London-based Capital Holdings Funds team is lean and only runs five products, with the emerging-manager vehicle, Discovery Capital Holdings, joining the range very recently. Edmond de Rothschild was a pioneer of hedge fund investing with the launch of Leveraged Capital Holdings in 1969, with the founder chairman Georges Karlweis picking Sopher as his successor in 2001.

Following closely behind the Capital Holdings Group is Permal, which has received 29 nominations for one-year performance and a total of 51 nominations, resulting in five awards over the years. Permal has received the most nominations of any fund of hedge funds that submit performance to the InvestHedge database over the years.

The product range of RMF Investments, later to become part of the Man product range, has received 28 nominations on a one-year basis and 36 in total, with six wins during the years 2002 to 2009. Also during the period 2002 and 2008, Financial Risk Management, which is now also part of the Man Group, has received a total of 23 nominations, and has won six awards. Over the past decade, Man Group’s fund of hedge fund division, which now includes Pine Grove Asset Management, has received 12 InvestHedge Awards from a collective 59 nominations.

The reason for not grouping all the Man divisions together is that the performance of RMF/Man was created by separate teams when the awards were handed out. Edmond de Rothschild also has a Geneva business, which is now under Sopher after the recent departure of Alexandre Col, Marc Sbeghen and Alexandre Pini, which has received 13 nominations and two awards over the years. If the collective group nominations and wins were added together, Edmond de Rothschild has 12 wins with 62 nominations.

For the nominations for the longer-term performance awards – introduced after the financial crisis and to reflect the longer-term investment horizons of the institutional investors – Permal pips the Capital Holdings Funds to the post with 22 long-term nominations versus 19, while Archstone Partners and Aurora Investment Management (known in the early years as Harris Associates) have both received 17 long-term award nominations each (with 19 and 15 respectively for the one-year awards).

Lighthouse and GAM have continued to win awards since the event’s inception. For 2002, GAM Trading walked away with the global macro award, which it also won for 2003. This fund, run by Arvin Soh and David Smith, won the 10-year award in 2009 and the 20-year award in 2013, with GAM’s multi-emerging markets fund, run by Kier Boley, winning in 2012. Lighthouse, which won Fund of the Year for Lighthouse Diversified at the inaugural dinner in New York, has also scooped awards in 2006, 2010, 2012 and 2013 with its Lighthouse Credit Opportunities Fund.

Silver Creek Capital Management, which has 20 nominations, is the best example of a turnaround for a fund of hedge funds that has not resorted to buying its way out of market events. The firm, which now has $5.6 billion under management, will be profiled in an upcoming issue openly discussing how it ran money a decade ago, and how it runs money now. During its glory years it was nominated for 19 one-year awards, and won eight in the period between 2002 and 2006.

This year, for the first time since the crisis, the old Dilllon Flaherty Partners Fund – now restructured and called Silver Creek DFP – is being nominated in the five-year global multi-strategy category as well as for the 20 year award. One of the key values the firm held onto during outflows after the financial crisis was that it wanted to stay aligned to its clients all the way. Making money from illiquid trades and co-investing alongside its investors was one of the foundations of its business in the early years, and something that funds of funds are starting to offer now as a way to differentiate themselves; however, the true mettle of a firm is tested when the liquidity dries up.

Less liquid, more mortgage- and credit-based investments have been the highlighted trades of managers in the past few years, with SkyBridge Capital taking home seven awards with 15 nominations; four of which, including Fund of the Year, taken home in 2013. Berens Capital Management and Magnitude Capital are two firms worth mentioning, having each walked home with six awards over the years with 10 and 22 nominations respectively.

Blackstone Alternative Asset Management, the largest fund of hedge funds in the world, has amassed 24 nominations and five wins, four of which are for Institutional Fund of Hedge Funds of the Year. This award, dubbed the 'asset-gathering’ award, is the only non-performance award that InvestHedge bestows. It is based on asset growth for the year and the number of institutional mandates won, as recorded in the monthly InvestHedge Allocator tables.

The Institutional FoHF Award was designed to reward the group that had passed the consultant due diligence, but for whatever reason does not submit numbers to the InvestHedge database. In 2006, Blackstone did submit its performance and received multiple nominations and an award in the Global Multi-Strategy section for its Blackstone Market Opportunities Fund.

Looking back at the history of the event by tracking the nominations, some 17 groups are no longer in existence – and that is excluding those such as FRM and RMF that have merged. One notable nominee with 10 nominations behind it is Ivy Asset Management, which was a casualty of Madoff. The Merriwell Partnership was the only InvestHedge winner to have won an award for a fund believed to have been holding Madoff at the time of winning.

What is interesting to note is that ABS Investment Management has never won an InvestHedge Award but has had four long-term nominations and four short-term nominations – and yet its return profile and that of its client, Constellation Wealth Advisors (winner of an InvestHedge Star of 2013), is that of a winner in terms of outperforming the MSCI for its global equity portfolio (page 23) and also the poster firm for the cumulative effect of compounding, a phenomenon that is often forgotten when taking a short-term view of allocating to hedge funds.

In an industry that is sometimes vilified in the press in the same way as estate agents and journalists, this club of professional hedge fund allocators – the 105 largest of which manage $728 billion – contributes significantly to the existence of elite asset managers.

In the past few years, these FoHFs have been undergoing transformations to be able to offer customised solutions to end investors, making performance harder to track. That said, the InvestHedge database currently has the performance of 1,548 FoHFs managed by 425 firms, and is planning to include the new daily liquidity FoHFs and GIPS-compliant composites in the coming months.

The annual global fund of hedge funds event, which is now held at the British Museum in London, started its life in New York, rotating between glamorous venues such as The Pierre, New York Public Library, Vanderbilt Hall in Grand Central Station, Cipriani and Gotham Hall.

These nomination and winner statistics have been calculated since the first InvestHedge Awards dinner in March 2003, and also take into account the first round of long-term award nominees for the upcoming InvestHedge Awards, which will be held at the British Museum on 24 September ( please click here for nominations) and the one-year InvestHedge Stars (InvestHedge, April 2014).

The rationale for including the one-year InvestHedge Star returns is that they are calculated using the same methodology as the InvestHedge Awards and allow investors to gauge FoHF performance winners on a one-year basis.

For the first six years, the InvestHedge FoHF Awards were calculated looking solely at one-year performance. The year after the financial crisis, three-year data was used and today the event, which is held in conjunction with the InvestHedge Forum in London, recognises five-year risk-adjusted performance for the majority of the categories, as well as rewarding longer-term excellence over 10- and 20-year periods.

The InvestHedge Awards is now run alongside the InvestHedge Forum, allowing investors and managers to network on an informal basis throughout the awards evening, as well as exchange ideas and brainstorm on the rapidly changing hedge fund investing arena over the previous two days.

InvestHedge Award winners’ history (ranked by number of wins)
Management company NOMINATIONS One-year NOMINATIONS Long-term NOMINATIONS Total No. of wins
Capital Holdings Funds 30 19 49 10
Persistent Edge Management 10 15 25 9
SSARIS Advisors 7 12 19 9
Silver Creek Capital Management 19 1 20 8
Pinnacle Asset Management 6 7 13 8
Archstone Partners 19 17 36 7
Lighthouse Investment Partners 17 14 31 7
GAM 16 14 30 7
SkyBridge Capital 2 13 15 7
RMF/Man 28 8 36 6
Financial Risk Management 21 2 23 6
Magnitude Capital 7 15 22 6
Berens Capital Management 10 0 10 6
Permal Investment Holdings 29 22 51 5
Blackstone Alternative Asset Management 18 6 24 5
Aurora Investment Management 15 17 32 4
Aberdeen Asset Management 14 6 20 4
Lyrical Partners 4 3 7 4
Thaliá` 2 5 7 4
Corbin Capital Partners 3 11 14 3
Protégé Partners 9 4 13 3
Federal Street Partners 8 2 10 3
Morgan Stanley Alternative Investment Partners 2 7 9 3
Gems Advisors 6 1 7 3
Dorchester Capital Management 5 1 6 3
Van Biema Value Partners 4 1 5 3
Balestra Capital 0 3 3 3
Optima Fund Management 1 0 1 3
Private Advisors 12 6 18 2
Global Selection Advisors 6 8 14 2
Edmond de Rothschild 5 8 13 2
EnTrust Capital Partners 5 7 12 2
Liongate Capital Management 6 4 10 2
Stenham Asset Management 3 7 10 2
Benchmark Plus 7 2 9 2
Antarctica Asset Management 5 3 8 2
Sire Corporation 2 5 7 2
Thames River 2 5 7 2
Eden Rock Capital Management 6 0 6 2
AC Investment Management 3 3 6 2
Treesdale Partners 5 0 5 2
Gapstow Capital Partners 4 1 5 2
UBS A&Q 4 1 5 2
Horizon 21 3 0 3 2
Peak Partners 3 0 3 2
Gorelick Brothers 2 0 2 2
SAIL Advisors 4 11 15 1
Sandalwood Securities 6 7 13 1
Credit Agricole (Amundi) 12 0 12 1
LGT Capital Partners 4 8 12 1
Notz Stucki 11 0 11 1
Gottex Fund Management 10 0 10 1
Ivy Asset Management 10 0 10 1
Mesirow Advanced Strategie 10 0 10 1
Aurum Fund Management 0 10 10 1
NewFinance Capital 8 1 9 1
Synthesis Asset Management 7 0 7 1
Centennial Partners (now Meritage Capital) 4 2 6 1
Key Asset Management 4 2 6 1
Rothschild HDF Investment Solutions 4 2 6 1
HSBC Alternative Investments 3 3 6 1
Abbey Capital 2 4 6 1
Fauchier Partners 2 4 6 1
BlackPoint Management 1 5 6 1
Richcourt 4 1 5 1
New Providence Asset Management 2 3 5 1
Arden Asset Management 4 0 4 1
Freestone Partners 4 0 4 1
Balter Capital Management 3 1 4 1
Spruce Capital Management 2 2 4 1
Coronation 3 0 3 1
Stonewater Capital 3 0 3 1
FutureSelect Portfolio Management 2 1 3 1
Hedge InvestHedge 2 1 3 1
Vision Investment Management 2 1 3 1
Pluscious 0 3 3 1
SSR Capital Partners 2 0 2 1
Stamford Associates 2 0 2 1
Attalus Capital 1 1 2 1
Eddington Capital 1 1 2 1
Meritas Advisors 1 1 2 1
Thybo Asset Management 1 1 2 1
Bornhoft Group 0 2 2 1
Alpha Beta Capital Partners 1 0 1 1
Constellation Wealth Management 1 0 1 1
JP Morgan Alternative Investment Management 1 0 1 1
Merritt Capital Investment Advisors 1 0 1 1
Moore Capital Management 1 0 1 1
Northern Trust 1 0 1 1
Pointer 1 0 1 1
Société Générale 1 0 1 1
Weston Capital 1 0 1 1
Swiss Capital Partners 0 1 1 1
Totals 545 365 910 236

Bank of America/Merrill Lynch provides the innovative research and market insights that will help you succeed, including commentary on the key themes for the year ahead as well as trends driving growth in important industries and sectors. You will gain access to global research and the other information you need to make informed investment decisions.

Click here for more details.

Latest Poll

Do activist hedge fund investors ultimately add value to the companies they target?

 - 58%
 - 42%

View previous results