RG helps institutional investors generate uncorrelated, absolute returns to hedge their portfolios against the risk of dislocation in mainstream asset classes. We do this by identifying the exceptional breed of alpha-generating fund managers, through our proprietary framework for product conceptualization, creation and distribution.
The skill to deliver uncorrelated, absolute returns on a risk-adjusted basis – and that too, on a sustainable, repeatable basis – is rare. And such outperformance requires superior skills in terms of actively selecting investment assets/securities that are distinct from the market. In order to identify investment managers with a proven track record of delivering alpha, we apply five filters/criteria:
Creating institutional quality products means partnering with the right asset managers. The process of productizing ideas while ticking the boxes on regulatory requirements is becoming an art in itself. That’s why, at RG, due diligence is not a last-on-the-list item. It’s an integral part, right from the start.
We undertake due diligence at our own cost and follow a thorough methodology to evaluate potential partners or products. This gives us the agility to tap opportunities faster as the groundwork is already in place.
Performance track record
Third party provider eco-system & relationships
Risk & compliance procedures
One of the biggest challenges today is finding the right product structure for strategies & ideas. Given the fiercely competitive eco-system, high investor expectation and complex tax and regulatory environments, the old playbooks just don’t hold good. At RG, we look at various commercial and legal angles, to make the fund structure tax efficient, cost effective, flexible, familiar to investors and robust, thereby enhancing its marketability and performance.
The following are key factors in our Fund creation process
Risk Management procedures
Risk & compliance procedures
We reach and distribute products to institutional and regional players of scale across Greater China, North Asia, South East Asia, India, Europe and MENA region.
Human skill and judgement, we believe, still matters in the world of asset management, particularly in the context of True Alpha – the continuing commoditization of several investment products, categories, etc. amid the “passive wave” notwithstanding.
Beyond the publicly available and discussed investment ideas and narratives, there are numerous, “under the radar”, niche themes that offer superior return streams on a risk- adjusted basis.This is the white space we, at Rostrum Grand, focus on. We identify those less talked about, non-glamorous asset managers who bring unique skill sets and competitive advantage vis-à-vis their area of specialization, and focus exclusively on harnessing the same to deliver True Alpha for their clients.
Inaccessible Risk Premium
We consider inaccessible risk premium to be a gateway to unlocking True Alpha, and look at the underlying return streams which are generally inaccessible to most investor types due to regulatory constraints and other structural factors. Such opportunities require deep expertise and active management in order to extract returns, quantify risk and provide dependable returns.
At RG, we identify managers running niche alternative beta strategies whose returns are structured around either non-traditional benchmarks and risks, or around alternative investment assets which track alternative indexes. Our comprehensive coverage of various hedge fund categories allows investors to leverage alternative beta effectively, and generate True Alpha.
Market inefficiencies have existed, do exist, and will continue to exist – irrespective of human beings or algorithms making the investment or trading decisions.These inefficiencies can arise due to several reasons, including information asymmetry. Many times, certain valuable information that can significantly influence the price or risk of a tradeable asset is not transparently available – thereby creating an opportunity for managers who have access to that data to generate True Alpha.
Institutional Asset Management
Among the many lessons the 2008 financial crisis taught investors is the need to mitigate counterparty risk. It is our firm belief that the best, sustainable investment management capabilities are institutional, and not individual, in nature. Fund houses having decades-long track records, experience of navigating multiple market and economic cycles, a long-term, consistent audit record, regulatory framework etc. are the ones we prefer.We look for best- in-class asset managers with institutional expertise, significant assets under management, risk management capabilities, and most importantly, intellectual capital.
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