Gottex reports across-the-board first quarter fund gains

Fund of hedge funds manager Gottex Fund Management Holdings posted gains across its entire fund range in the first quarter and forecast its flagship market-neutral product would make good all past losses by June.

The generally strong first quarter, in which the overall hedge fund industry made 4.9% and funds of funds 3.4%, plus fresh subscriptions, helped Gottex increase its funds earning incentive fees by 3.1% from $7.3bn to $7.6bn.

Joachim Gottschalk (pictured), chairman and CEO, said: “The global financial rally towards the end of 2011 has continued to enhance hedge fund returns. This is an important factor as investors consider repositioning their portfolios to look for yield in 2012 and beyond, which we believe will drive positive growth in asset flows in our industry in the longer term.”

The first quarter’s share market rally may have helped many long-biased equity hedge funds make 7.23% last quarter, but it will not have aided Gottex’s flagship disproportionately, because the market-neutral strategy its chosen managers pursue means they allocate equal amounts to bets prices will rise, and other bets process will fall.

Nevertheless Gottex’s core market-neutral multi-manager products comfortable beat the 1.9% from market-neutral managers on average, while its multi-asset absolute return product made more than 4.1% net of fees. Gottex’s alternative credit strategy and Constellar products made 4% and 4.7% respectively.

While the firm’s flagship is expected to regain its high watermark by mid-year, Gottex’s second largest market-neutral product was 5.8% away from reaching its own.

The group predicted allocators would start to putting more fresh money into the industry once more, not least because of “growing pressure investors are experiencing to achieve higher returns than cash and sovereign bonds”.

After accounting for performance on markets and net new flows, assets in Gottex’s market-neutral and directional strategies fell 3.6% last quarter, while asset-based strategies assets declined 2.3%.

In a sign of where Gottex, and the broader industry may be heading more generally, its advisory mandate assets rose 27%, to nearly $1bn.

The Guernsey based holding company for the Swiss-headquartered group noted it has no debt and “substantial cash reserves” exceeding $50m.


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