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Why GSAM launched its multi-manager alts portfolio in Asia

Why GSAM launched its multi-manager alts portfolio in Asia

The multi-manager trend has been picking up in the liquid alternatives space in Asia in the past two years and Goldman Sachs Asset Management is capitalising on it.

In February, HSBC Private Bank onboarded the Goldman Sachs Global Multi-Manager Alternatives Portfolio (GMMAP) in Singapore and Hong Kong. 

Speaking to Citywire Asia, Robert Mullane, a co-portfolio manager of the fund said: ‘It’s a reaction to the disappointment with single manager liquid alts funds -- not broadly, but certainly within pockets.

‘I think certain asset managers have done a better job of running liquid alts than some of the typical hedge funds.’

While Asian high-net-worth-individuals haven’t traditionally allocated much of their portfolios to alternatives, private banks have been piling into single manager hedge funds.

‘What was interesting with our product is that a lot of the private banks seemed frustrated with the outcome of some traditional hedge funds. For some banks, the Ucits fund managers they picked didn’t execute well or the fees were too high.’

Mullane’s fund has a single layer of fees. Investors are charged management fees but the netting risk lies with Goldman Sachs, which pays the sub-adviser’ performance fees out of the management fees.

The fund charges a 10% performance fee on return in excess of the cash benchmark (three-month US dollar Libor). Ongoing charges stand at 2.22%.

It is co-managed by Kent Clark.

Global macro

Mullane identified global macro strategies as being the most successful in the Asian hedge fund space.

‘In terms of strategies, we’ve had success in global macro in Asia because managers based here have a good read on China, which helps their macro positioning,’ Mullane said.

‘We are also concerned about overcrowding of trades by managers and I think just having a broader mandate or a mandate that focuses on some opportunities in Asia is good.

‘On the equities side, it’s been more challenging because there have been large market moves in Chinese equities in the past couple of years.’

GMMAP does not have any Asia-based macro manager within it currently.

Manager needs 

Mullane outlined certain trends that are making multi-manager funds popular with hedge funds.

‘We found that managers don’t want to launch Ucits funds because they are concerned about cannibalisation of their main business and aren’t overly happy with the additional level of transparency -- not because they don’t want people to know what they do, but because they don’t like the publicity of their track record.

‘They also don’t like doing the distribution.’

A multi-manager fund works for them because they are sub-advisers, there is no way that people can invest in them directly so there is no cannibalisation and GSAM handles the distribution.

Launched in December 2015, the fund is a sub-fund of the Ucits-qualifying Luxembourg-domiciled Goldman Sachs Funds SICAV. At any given time, it employs between five and 12 sub-advisers.

In Asia, it is available to accredited and institutional investors in Singapore and professional investors in Hong Kong.

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