Christophe Reech of Reech AiM Partners explains how he finds and manages alternative investment opportunities to provide value and consistent returns for investors.
Date: Oct 2011
In addition to discretionary management in equities, fixed income or credit, the firm also does systematic trading in long volatility-type strategies, as well as real estate.
Differentiating the funds
A key thing the firm does to differentiate itself, said Reech, is approaching its strategies in a unique way. For example, with managed futures, a lot of clients in Asia at the moment might have five or six different types of managed futures funds in their portfolios, he explained, yet they each focus on a similar strategy.
As a result, the firm has tried to construct an offering which is different. So on CTA, for example, although it has a trend-follower, it is uncorrelated to the other trend followers in other funds, said Reech.
Another example relates to its joint venture real estate fund with CB Richard Ellis. When the firm observed in 2007 that real assets were completely diverging from their representation price action in the financial markets, it created funds which effectively allow it to arbitrage the real world against the financial markets.
Reech said it did this by shorting the physical market and consequently arbitraging the latency between the price action in the real world and the financial world.
Opportunities in real estate
In Europe, despite the market environment, Reech said the firm still has a positive outlook on physical real estate, even if this isn’t represented in the financial markets.
For example, when it looks at the representation of the price action of real estate in equities compared with the returns of physical assets, there is a gap of two-and-a-half times wider than the largest spread it has ever since during the life of our fund, he explained.
In Asia, meanwhile, Reech said the real estate market is very dynamic, and there are questions about whether parts of the region are experiencing a bubble.
Managing funds to allow for greater risk
According to Reech, rather than managing money by chasing performance, his philosophy is that performance is not the starting point.
He said his view is that if people don’t take risk, they don’t make money. People who make money by not taking risk are lucky – they can gamble or invest in somebody who is lucky, but their luck will run out one day, he said.
Reech, however, just wants to be consistent, which he does by profiling risk and pay-off, with performance being the consequence. As a result, the firm doesn’t need to be right in its assumptions in terms of performance tracking.