SSARIS upping exposure to Asian hedge funds

State Street's alternatives unit plans to invest more in Asia-based managers who are closer to local knowledge and can trade in local time zones.
SSARIS upping exposure to Asian hedge funds

SSARIS, an alternatives affiliate of State Street Global Advisors (SSgA), is looking to increase its exposure to Asia-based strategies for its fund of hedge fund range, given the growing number of experienced managers in the region, according to senior executive Andrew Fisch.

“We are ramping up our exposure in terms of the numbers of strategies in Asia because of the increased talent,” says Fisch, senior portfolio manager for the fund of hedge funds group at SSARIS.

The Connecticut-based firm, which is 60%-owned by SSgA, runs about $1.9 billion in hedge funds, fund of hedge funds and also individual managed accounts for its mostly institutional client base.

“Since 2008, the amount of talent and desire to produce absolute returns [from hedge fund strategies] has increased dramatically,” notes US-based Fisch while on a recent multi-stop trip through Asia to meet fund managers.

Regional exposure in the firm’s FoHFs was previously slanted towards Asia-focused funds run by large New York or London-based firms. “Although the knowledge was very far away, the skill-sets were much more defined,” says Fisch.

Experienced and proven fund managers have changed the landscape in the past few years, he notes. Among the game-changers are managers who have run bank proprietary desks or Asian portfolios at large, global multi-strategy funds.

“The level of skill in managing a hedge fund portfolio has improved dramatically in Asia. We’re more inclined now to want to invest in Asia-based managers who are closer to local knowledge and can trade in local time zones,” says Fisch.  

SSARIS's FoHF series is structured as a multi-strategy feeder with three sub-strategies: global macro/managed futures, event-driven/relative value, and global long/short equity. Allocations are made globally to funds that match those themes. Fisch seeks out managers with a proven ability to generate returns that are non-correlated to the market.

Asia, aside from being a source of hedge funds, is also being viewed by SSARIS as a source of new investors. The region accounts for a relatively small proportion of its global clientele, Fisch acknowledges, although its overall biggest client is a Japanese institution.

SSARIS plans to grow its client base in the region, taking advantage of Asia’s growing wealth and a post-crisis change in investor attitudes. “We’re a low volatility, low draw-down, modest-return product," Fisch notes.

While these qualities sit well with pensions – which account for more than half of SSARIS’s investor base – they appeared less lucrative compared with other assets during the global bubble. “Prior to 2008, returns in the stock and property markets were much more attractive.”

The firm, founded in 2001, weathered the financial crisis well and has been steadily growing its assets, through both fund performance and increased investment capital. “We’re at peak assets now,” Fisch notes.

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