London-based GAM, which Julius Baer recently acquired from UBS, oversees $22.7 billion of hedge fund assets, making it the second-largest fund-of-funds manager in the world. Originally known as a European powerhouse, GAM has been expanding in the U.S. for the past several years. Joe Gieger, formerly president of Lombard Odier Darier Hentsch in the U.S., joined GAM in September to run the company's fund and institutional business in North America.
You joined GAM from Lombard Odier. Why the move from private equity to hedge funds?
I joined GAM because I was excited about their global reach, their product offerings and their commitment to the U.S. market. As far as making a move from private equity to hedge funds, it's important to note that they are both alternative asset classes and that both are growing quite nicely. GAM offers a broad array of alternatives such as fund of hedge funds and single-manager hedge funds, and who is to say that we wouldn't offer private equity as well? As a specialist in alternatives, it doesn't preclude the fact that in the future there won't be opportunities for private equity as well.
Some say there are too many investors chasing returns in the hedge fund universe. Returns this year have been poor across all strategies. What's your take on this?
Hedging, by definition, is not about producing the highest returns. It is about having consistent returns, investing in newer asset classes and using those asset classes in conjunction with the total portfolio to accomplish and meet the funding liabilities of a pension plan in a more steady way. While clients are considering holding alternative investments in their portfolios, diversification of risk, low correlation to markets and lower downside volatility are all aims of this type of investment. However, using a fund of hedge funds in conjunction with
futures will potentially produce higher returns than equity, both in up and down market cycles. But some areas are limited by capacity, and it's the job of a fund of fund or single-strategy manager to constantly look for ideas to generate the appropriate return opportunities.