Pictet & Cie, Switzerland's biggest closely held private bank, is shifting more of its $10 billion hedge fund investments to newer, lesser-known managers from the largest, most established houses to boost returns.
The bank may increase money invested in newer managers to 60%, said Nicolas Campiche, Geneva-based CEO of Pictet Alternative Investments. It currently allocates about half of the assets in its funds of funds and tailored pools for clients to “blue-chip names.”
Pictet is focusing on returns while more investors are adding money to the largest and oldest funds seen as having the expertise to control risks. It's also reducing its bias toward older managers because of the “Druckenmiller risk,” said Mr. Campiche, referring to the New York hedge fund manager Stanley Druckenmiller who announced the end of his 30-year career after returns failed to meet his expectations.
“The typical situation in the aftermath of a crisis is people tend to focus too much on the risk and not enough on performance,” Mr. Campiche said in an interview in Hong Kong on Tuesday. “We're trying to refocus a bit our portfolio on lesser-known entities, smaller, more nimble funds.”
Managers overseeing at least $5 billion drew 75% of the $19 billion net inflows in the industry in the third quarter, data from Hedge Fund Research Inc. show.
Hedge funds with less than $100 million of assets returned an annualized 16% from 1996 to 2007, beating the 11.5% for peers with more than $500 million of assets, according to a PerTrac Financial Solutions study. Small and midsize funds also outperformed large peers in 2009, the software provider said in a statement last month.
