While many money management firms are looking to diversify their strategies and offerings, BlueBay Asset Management LLP's CEO is very happy to stick to his fixed-income specialist script.
One thread runs through a conversation with Erich Gerth, whose one-year anniversary in the top job at the $60 billion firm is fast approaching: focus.
"We're completely comfortable being in the specialist space," Mr. Gerth said. "Growing an ETF business is not of any interest to us. We are an investment organization, (we can) innovate in the spaces we're in, and continue to sit at the convergence point between traditional and alternative" money management.
BlueBay's heritage lies in hedge funds, alternatives and long-only strategies. And while the focus remains on playing within the fixed-income spectrum, BlueBay's strategies span alternative and mainstream asset classes covering emerging markets, multiasset credit, investment grade, leveraged finance and convertibles.
"In the space that we compete in, it's multiple trillions (of dollars). In active fixed income there is so much to play for, and so if we continue to focus" on the investment thesis, Mr. Gerth believes the London-based firm can continue to be successful. That requires staying relevant to clients and their needs, and capitalizing on resources afforded by its relationship with parent firm Royal Bank of Canada, he said.
"We don't have to chase assets under management," in particular when it comes to the increasingly important part that alternative asset classes play in institutional investors' portfolios, since "it's completely embedded in our DNA," Mr. Gerth said.
The first fund BlueBay launched was a hedge fund; the second a long-only strategy. But the firm in the past was perhaps better known for its hedge funds and hedge fund-style of investing.
"We have witnessed their metamorphosis from boutique-style hedge fund manager to a more diversified asset management business, in terms of the type of strategies that they offer, moving to more long-only strategies, diversifying the client base and being more captive in launching public open-ended funds," said one consultant with knowledge of the firm, who spoke on condition of anonymity.
With that has come a development of its business model, said the consultant, moving into a world that is "more about asset gathering." However, the person said BlueBay executives "still believe that alpha is what they want to deliver ... The way they differentiate themselves is not on price but on quality and value, and the alpha they deliver."
The hedge fund link is a legacy Mr. Gerth is happy to hear acknowledged by peers and clients.
"I do (hear us referred to as a hedge fund). But I like that." Mr. Gerth recalled attending an awards ceremony solely focused on hedge funds, sitting at a table with the largest hedge fund firms in the industry where BlueBay's presence "doesn't seem unnatural to them," and taking part in a long-only money management conference, feeling "very comfortable there."
Of course, there is a challenge to being a fixed-income player, albeit a specialist. "If we are just thought of as a fixed-income specialist," there is a group of firms that "dwarf" BlueBay. "But in that same group of fixed-income specialists, there's a much shorter list that can successfully move along the continuum from one end to the other, and feel comfortable at both those types of events. That's what we are trying to achieve, that is our unique proposition," Mr. Gerth said.
While all assets under management are fixed income, alternatives comprise 25% of that total.