“Now that central bank intervention is diminishing, alpha delivery may increase,”says Arcano’s Zulueta

Arcano Partners’ head of Manager Selection Ion Zulueta comments on his firm’s business expansion, underlying the independence and specialisation of its three divisions.

Arcano Partners was founded in 2002 by Álvaro de Remedios as an investment bank, which is reflected in the fact that it remains the firm’s main business accounting for some 60 out of 150 employees working for the firm.

Arcano is currently split into three divisions:  Investment Banking, Asset Management – launched in 2006 and with around €4bn AuM -,  and Multi Family Office.

Madrid-based Ion Zulueta is responsible for selecting managers in all strategies for the firm’s clients at the family office unit, which advises around 30 families and tallies some €2bn in assets under management or advisory. The family office’s team comprises 12 people providing an integral service to clients, which includes investment advisory on liquid financial assets, private equity and debt, real estate focusing on the Spanish market and finally, legal, fiscal and testamentary aspects as well as wealth planning.

 Exposure of the firm’s client portfolios to Ucits hedge funds, including L/S equity, equity market neutral, discretionary macro, trend following, systematic fundamental macro, and catastrophe bond strategies, represents 15% of overall investments.

“Aside from adding performance, these strategies aim at diversifying the different betas of our clients’ portfolios,” Zulueta says.  

Although Zulueta normally favours active managers, he would also consider an indexed solution when investing in a market in which adding excess returns proves to be difficult. “We may also opt for the same solution when we take short-term beta bets and when we take exposure to a certain risk factor,” he adds.


Arcano Family Office’s investment process is equally quantitative and qualitative. “Regarding to the quantitative side, the focus is on judging fair and accurately the quality of the managers’ track record: its length, style and factor risk biases, risk adjusted, returns, potential drifts along the road, consistency, performance attribution.”

 On the qualitative, the emphasis is on the firm (philosophy, honesty, expertise), the investment management team (background, experience, stability, alignment of interests,), the fund’s investment strategy and risks, and finally, on the risk management measured by PMs and by the Risk Management and Compliance teams.

Zulueta prefers managers who are independent, performance-focused, specialized and transparent. Also those who are able to attract investment talent, and whose assets under management are large enough to have a proper operational infrastructure, but without reducing their capability to add value.


Liquid funds with an unusual exposure to illiquid assets are red flags for Arcano since they present a mismatch between the liquidity terms offered and their underlying assets’ liquidity.

“We would not invest in small funds with exposure to less liquid assets – like credit or small caps – if the investor’s base is too concentrated, volatile or too dependent on retail investors.

“Likewise if we receive confusing replies or if the asset manager has some kind of non-ethical behaviour.”


Looking ahead, Zulueta believes HNWIs will remain interested in active managers. “Since the Great Financial Crisis, it has been a tough environment for active investing and now that Central Bank intervention is diminishing, alpha delivery may increase. That said, clients may reevaluate the active managers they have in their portfolios to keep just the good ones at the right price.”

However, there will also be room for passive investment since the alpha delivered by some PMs arises mostly from their portfolios’ biases to risk factors, with not too much alpha left after fees.

“If alpha delivery improves, and/or ETFs investing in less liquid assets (credit or small caps) face a potential liquidity stress, the current support for passive may diminish.”

Although he does not predict major changes on investment structures, he sees a new trend evolving to fund managers implementing their multi manager vehicles through managed accounts.

And warning investors about illiquid, complex strategies looking for decent and correlated returns, Zulueta says: “When the tide turns we fear some of these investments prove costly for their investors.”

Eugenia Jimenez
Eugenia Jiménez speaks Spanish and is Iberia Correspondent for Investment Europe covering Spain & Portugal, as well as assisting with coverage of Italy. She holds a UK NCTJ- accredited Multimedia News Reporting course and studied Journalism at the University of Sevilla. She has worked for local media organisations in Sevilla and Málaga, mainly in broadcasting as a news reporter, among other roles. She has also worked for a local newspaper in Sevilla, reporting on current affairs, local government and culture.

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