Gottex puts crisis behind it as flagship hits highwater mark

Hedge fund allocator Gottex Fund Management Holdings, whose troubles in the crisis ranged from winding down offerings to fraud at a company some underlying managers invested in, grew assets in an institutional unit five-fold last year and saw its flagship start collecting fees again.

The fund of hedge funds manager ran $8.3bn by the end of 2010, up 14% from $7.3bn mid-year, and 2% above the $8.1bn it ran at the end of 2010, according to its annual results published today.

Some $1.8bn of fresh subscriptions last year outpaced detractions coming from $1.2bn of redemptions, and a combined $470m of run-off investments, adverse FX fluctuations and performance losses.

Group gross revenues fell last year to $64m, down 23% from $83m in 2009.

Joachim Gottschalk, chairman and chief executive officer, said: “The business environment remains very competitive. Economic, environmental, sovereign and political risks combined with inflationary pressure and interest rate uncertainties are likely to lead to another volatile year. Gottex remains a cash generative business with a strong, debt-free balance sheet.”

He also suggested Gottex could buy rivals: “As one of the largest global fund of hedge funds managers, we expect to play an important role in the consolidation of our industry, provided we can combine people, products and value in such a way, as to present clear advantages for Gottex’s clients and shareholders.”

The company said firms it might acquire would need “complementary product lines”.

The group’s institutional platform and services offering, Gottex Solutions Services, was launched in mid-2009 and by the end of February had $1.8bn. During last year, assets in this unit grew from $330m to $1.6bn.

Gottex has a target of $2bn for GSS, which includes segregated accounts, which are increasingly popular especially with institutional investors.
Such allocators now comprise 90% of Gottex’s clients, with pensions 64%.

Gottex’s goals for 2011 include growing GSS, to “start generating consistent asset flows in our multi-asset endowment funds and Ucits products by the second half”, and expanding in Australasia. To this end, co-founder Max Gottschalk is relocating to Hong Kong next month.

In January Gottex’s Market-Neutral Plus product reached its high water mark, at which point funds are typically allowed to recommence collecting incentive fees.

Its second largest market-neutral product sat just 4% off its own mark by February.

That month, the group also launched a customised portfolio of fixed income and credit hedge funds for an institutional client, it said, “providing [the client] with a welcome diversification from their long-only fixed income allocation”.

Gottex did not invest in fraudster Bernard Madoff, but it suffered in 2008 when some hedge fund managers it invested in put money in US company Petters Group Worldwide, itself entangled in a fraud.

Gottex also wound down one offering and restricted withdrawals.

David Walker

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