Finding top talent will be banks’ biggest challenge
Fund selectors for hedge funds must develop superior skills, says Pictet.
Private banks incorporating alternative investments into clients’ portfolios must develop superior manager selection skills, according to Rolf Banz, chief investment architect at Pictet Asset Management.
“Fund selectors for hedge funds will come under greater scrutiny than for traditional investments,” said Mr Banz. “Their major challenge will be to identify consistently superior managers. They must be able to differentiate lucky fools from unlucky geniuses.”
Pictet began investing in hedge funds in 1989 with a team dedicated to finding the best talent, before launching its first fund of hedge funds in 1994. Today, Pictet invests $8bn (E6.7bn) of clients’ assets in hedge funds.
Nicolas Campiche, CEO of Pictet’s manager selection services, said the banks’ selections were very risk-adverse and only those strategies truly understood by his team could be used. “To be selected, a manager has to be able to generate alpha, but he also needs to show he is running a sustainable business, and in the last few years we have had more problems with the second.”
