Infovest21 Investor Focus: US family offices looking more to managers in Asia and Europe

An increasing number of US family offices are looking to Asian and European hedge fund managers. One reason is their non-correlation with US hedge fund managers.

Christine Jurinich, partner and member of the investment committee at Offit Capital Advisors,points out “In 2008, there were some specific strategies or even an outlier of a manager in a specific style that preserved capital in 2008 through a combination of hedging, managing exposures tactically or security selection. We have found that there are talented hedge fund managers, some in Europe, for example, that were in strategies such as long/short equity, volatility or fixed income that just did a better job than funds in the tri-state area. We believe that some of these, as well as some funds in Asia, South America and Europe can diversify the return stream, although clearly in 2008 Asian exposurein particular had large losses and was very long biased. That being said, there are long/short equity funds that also were down slightly to positive in 2008 also outside the tri-state area that are off the radar, that diversify the return stream and don’t own APPL for example, which is what we are looking for.”

Another New York family office points out that they are focusing on Asia and emerging managers. “We are taking a broader view on where investment opportunities are and are not just focused in the US.”

Another reason for looking abroad is that some US families feel vulnerable to the US dollar and dollar returns. “US based investors are concerned about the US dollar as a store of value, even with positive nominal returns, value of these dollars could erode over time. So non-dollar investments offer the opportunities for real gains that are derived from the currency and the underlying asset exposure," observes Jurinich.

Anthony Gordon of the Gordon Family Office says he is looking for a healthy dose (20-30%) of multi-currency cash allocations in the Group of 10 and emerging markets. “Investing across borders is the way to go today.” He is keen on Brazil, Russia, India and China and other countries who supply the large economies of Korea, Mexico, Indonesia, Nigeria, South Africa, Vietnam and Australia. Not only because of their “higher potential growth but also the assessment of the sheer amount of work currently required to restore confidence in the US financial and political system.”

He adds that quantitative easing by the Federal Reserve may do little to spur consumer demand unless unemployment and poverty is reduced.


Excerpts from
Infovest21's September Investor Focus.