ERAAM’s 3% Outperformance: Why “Day 1” Investing Can Even Be Superior To Seeding

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ERAAM (Europanel Research & Alternative Asset Management) was founded in 1998 and focuses exclusively on helping investors to access European hedge fund managers. For 8 years, ERAAM has been running money for CALPERS, where, as the smallest firm, they were the best performer in CALPERS hedge fund of funds program, beating also CALPERS direct hedge fund portfolio. Following a high quality process, ERAAM’s investors did not suffer any blow up, gates or side pockets in the 2008 crisis.

Since 2008 ERAAM has concentrated on smaller and emerging managers. As experienced risk takers, the team has proven to add alpha through their manager selection, skilfully combining volatile managers into concentrated portfolios.

ERAAM’s 3% Outperformance: Why “Day 1” Investing Can Even Be Superior To Seeding

Over the last 10 years, ERAAM invested in 285 managers and developed innovative models like the “AUM Growth Deal” that allows early investors to significantly reduce fees by setting up win/win agreements with managers. ERAAM’s custom mandates can provide access at lower fees than direct investment. By identifying the right managers early on and focusing on governance and transparence, ERAAM’s track record shows that with a 3% outperformance, “Day 1” investing can even be superior to seeding.

In this Opalesque.TV BACKSTAGE interview, ERAAM co-founder and CEO Cyril Julliard with CIO Olivier Kintgen also speak about:

  • How to use hedge funds to achieve an institution’s goals and the need to bring value at lower cost
  • Why hedge funds are best used for themes, not as an “asset class”

How to successfully invest in Emerging Managers:

  • Good qualitative due diligence relies on a good network
  • Why investing with smaller manager can be safer than with larger shops
  • Why year 1 investors face less drawdowns than investors coming later
  • The evolution of the hedge fund of funds and the new hybrid fund of funds”
  • Theme-based investing
  • Again, at lower fees
  • Leveraging by co-investing
  • Going where the large investors don’t go

European opportunities:

  • Are best found in niches
  • Asymmetrical opportunities in European credit are “just starting” – deleveraging will continue for 3 years
  • Local presence required as opportunities are generally smaller
  • Why ERAAM is “not short of ideas”: Many opportunities opportune for co-investments

Cyril Julliard, CEO, co-founded ERAAM in 1998 with Bertrand Van Houtte as one of the first asset management companies in France to receive a license for fund-of-funds alternative asset management. Since 1985, Cyril has been a specialist bond arbitrage fund manager with $700 million under management (BZW Puget-Mahe). He then became a member of the Board with direct responsibility over securities brokerage and asset management (1991-1996). From 1996 to 1998, he was managing director of Finacor-Vendôme, a leading French securities brokerage business.

Olivier Kintgen, CIO, joined ERAAM in 2001 as Partner and was appointed to the investment committee in 2002. He worked at Bank of America as Head of Fixed-Income trading in Paris, treasurer of the Warsaw subsidiary and Head of central Europe fixed-income trading, based in London. In 1999, he developed Insight Finance, a company specialising in statistical analysis and statistical arbitrage models. From 2001, he was manager of a futures fund based on models developed by Insight and run by Crédit Agricole Indosuez Luxembourg.

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