HSBC Global Asset Management Global Head of Institutional Sales Barbara Rupf Bee talks to Chris Panteli about the move away from fixed income, growing interest in emerging market debt and the changing role of hedge funds
The evolved US players are looking for far more than just global fixed income and global equity. In North America, we’ve received a lot of interest for new frontiers and into China equity rather than regional Asia or Latin America, which tends to be a lot more standard across Europe. MENA was a theme but this is no longer in the limelight considering what’s going on in the region.
There is a lot of interest in new frontiers, but this demand is stronger from the US than Europe. The US are risk takers on the equity perspective – they are used to a high level of equity exposure.
Chris Panteli: How has investment in hedge funds changed over the last few years?
Barbara Rupf Bee: What I am seeing is a very new trend emerging from the larger allocators who are starting to use hedge funds as an addition to their equity or cash allocations. A long/short fund might be very suited to being used efficiently in the Asian allocation. So rather than being used in the investor’s alternatives allocation, an Asian long/short fund would be used in the Asia bucket and a Europe long/short into their European allocation. That can be done through a dedicated fund of funds strategy or into a single fund if you can work out the efficiencies.
Another thing I’ve seen particularly in Europe is the need for vehicles dedicated to a certain market, whose strategies mirror the needs of their allocation much more practically. That’s where the hedge fund of fund world needs to grow up a bit. It’s going to become more service-related with an advisory discretionary type of set up likely to increase. Pension funds in general want to know more, and that includes about individual hedge fund allocations. As they learn more they usually become concerned with the efficiency ratio the investment has when added on to an overall portfolio. By being able to direct the allocations more granularly, you can mirror your needs far better and a mandate version is able to do that far more directly.
Chris Panteli: You have previously said you expect the use of multi-managers by pension funds to grow over the next few years. Is that playing out?
Barbara Rupf Bee: We see most of the interest from small to mid-sized pension managers. If you run a pension fund, even if you have your own allocation team, use consultants or a combination of the two, all you buy is an allocation model, and need to focus on your own allocation decisions. If you do not have these resources available, that is where a multimanager or multi-asset manager, as I think it should more appropriately called, comes into play. You actually buy an evolving strategy which you define with the board of directors or investment trustees and then have an allocator set. It’s balanced, forward thinking and allows you to bring in your own ideas too.
We have also worked with several institutional investors on multi-asset propositions in emerging markets, which has been very successful. They give us guidelines for what they would like to achieve and we set it up on their behalf.
Biography
Barbara Rupf Bee joined HSBC as global head of alternative business development and sales in 2003. In July 2005, she was appointed chief executive officer of HSBC Alternative Investments – the investment advisor to HSBC’s fund of hedge funds and institutional client portfolios. In 2007, she moved to HSBC Global Asset Management to take the over the global institutional sales role. She joined HSBC Union Bancaire Privée, Zurich where she was in charge of the Products & Sales department since November 2002.
