Cantor Fitzgerald Investment Advisors, a recently established asset-management business, is looking to develop relationships with hedge funds, particularly in credit, and especially in Asia.
John Trammell, the firm’s global co-head in New York, explains the vision of the new unit is to create hedge-fund products to offer to the firm’s clients and counterparties.
That may involve building on the former Cadogan Asset Management hedge fund-of-funds business that Cantor acquired late last year, and which now has about $600 million in AUM. Trammell had been a senior executive at Cadogan.
But it also could mean co-investing, seeding new or existing managers, providing segregated accounts, developing commingled strategies, and directly into specific funds or in a fund-of-funds format – anything that provides a solution in the hedge-fund space, particularly in credit strategies.
Cantor Fitzgerald is a well-known interdealer broker for everything from currency to real estate. It also has a prime brokerage arm, and is a licensed primary dealer for US government debt securities.
Although based in New York, the firm has a long-standing presence in Asia, with offices in China, Korea, Japan, Hong Kong, Singapore and Australia. Sean Lin runs the Asia-Pacific business out of Hong Kong.
It got into the asset-management space with the Cadogan acquisition, and now seeks to use its hedge-fund and fixed-income expertise and network to create an investment-advisory and asset-management business.
Asia is seen as a major part of this initiative, partly because Trammell has regional experience, having helped established Investor Select Advisors in Tokyo in the 1990s. He visits Asia regularly and says it is at the centre of the firm’s ambitions to work with hedge-fund managers.
CFIA’s goal is to leverage its relationships with other financial institutions and with hedge funds to generate ideas and interesting ideas for clients. “When we find the right person [at a counterparty] we can have a conversation,” says Trammell.
So far, market volatility has made it difficult to settle on particular strategies, which has held back execution. For example, says Trammell, six months ago the firm would have been able to market China hedge funds. But investor favour quickly shifted to the US, and then to distressed.
“The world is confused about what to do with cash,” Trammell confirms.
Another challenge is establishing the firm’s credentials. Although it has the Cadogan business and track record, the broader ambition to be a player in the hedge-fund world requires building trust with managers and counterparties. The firm also needs to work with the parent company’s sales traders, to enable them to become effective touch-points for the hedge-fund strategy.
For now the former Cadogan business brings Cantor a platform investing into about 40 funds marketed primarily as a commingled fund of funds. But it is keen to diversify and to work with counterparties, either managers, investors or other securities brokers, and Asia will play a key role.