Ucits key to building business
Eligo Asset Management explains its Ucits path to growth from small beginnings.
Eligo Asset Management as a name is so new that the family-office-owned investment boutique launched its branded website only at the start of 2013.
Yet its business plan has been a number of years in the making, and it is moving to implement a Ucits structure to better support its longer-term objective: to grow its assets by appealing to a broader investor set than currently served in its home market Sweden.
Eligo Asset Management currently has some SEK700m (€81.6m) of assets under management, including those managed on a discretionary basis.
The business originally started under a different name (see ‘History of Eligo’ box), to manage the assets of a wealthy family, which made its fortune from developing and then selling an electronics parts catalogue business.
Having previously put significant portions of that wealth out to be managed by a number of different financial services providers, the decision was made to bring the assets under control of a single business.
The move would provide a clear focus on wealth preservation, but also with an eye to opportunities for adopting an investment approach that could appeal to external investors, according Joakim Oscarsson, CEO and portfolio manager (pictured above).
Oscarsson joined the business at a point in 2008 when the family had already made its decision to change course, and had sold out of holdings in 2007, before the financial crisis, in what Oscarsson says is one of the best timed moves he can think of.
Oscarsson’s chief role has been to develop and implement a risk parity concept that steers Eligo AM’s management approach.
This relies on looking to diversify across asset classes, but with a commitment to ongoing adjustments to the asset mix, to achieve a balance of risk that facilitates improved control over portfolio risk, as well as helping achieve long-term absolute returns, (see Risk Parity box, opposite).
Oscarsson and his team look to four main asset classes: global equity, credit, interest rates and commodities, although each of these may be split into further sub-groupings.
Asset allocation is key: Eligo is not a stockpicker. It does not believe active managers can add sustainable excess return, and invests only in passive solutions.
The process is driven by quants and rules-based investment decisions to avoid what it calls “the subjective approach when implementing investment decisions”.
Oscarsson says: “We started with managed accounts, before moving on to start a fund in order to attract some external capital. But it was not until 2012 that we decided to push this, which is where Per [Torpare] comes in.
“We spent 2012 getting a feel for this, but this year we will engage in further developments to support our external business, including changing the fund structure.
“The sales strategy remains, but we are adapting the structure to adjust to our external partners or customers in a better way.”
Per Torpare, head of marketing and sales, says this change means the fund, Eligo Asset Allocation, will adopt a Ucits structure.
For Oscarsson, the Ucits structure also opens up the possibility of being able to speak to more fund of funds managers. Torpare notes that the business has so far been focused on the assets of its founding family, and some other similar investors: all owners of capital. The change now means that Eligo is looking to extend its appeal to managers of capital.
Torpare (pictured left) says: “This would include fund of funds managers, but also institutional investors primarily focused on investing others’ capital. The field of play there looks different for a smaller player such as ourselves.
“However, we are not unique per se in starting a journey and then growing thereafter. We are confident in our fund and our management, and our capabilities, and we have had good responses from the institutional investors I have spoken to.”