GAM's Gieger Talks Return

TSC: Describe your fund-of-funds business in terms of size, strategies and geographic exposure. What makes GAM unique?

JG: GAM has been managing funds of hedge funds since 1989. As of last September, GAM manages in excess of $18.6 billion in fund-of-fund strategies. We run $2.2 billion of internal hedge funds and also oversee $1.9 billion of external managers such as Caxton or Gabelli, who subadvise funds for us. Our single-manager hedge funds focus primarily on equity long/short, and we have strategies that cover geographic and strategy-specific styles, including the U.S., Japan, Asia, Europe and globally.

Our largest fund of funds, Multi-Strategy, has $8 billion by itself and is diversified by both geography and strategy. We're one of the few managers to offer both single-manager hedge funds as well as funds of funds. We not only have one of the largest teams of hedge fund professionals in the world, we boast a rigorous manager selection process and extensive due diligence capabilities.

TSC: Tell us about performance.

JG: Our multi-strategy fund of funds, created in 1989, has not had a negative year in over a decade. Furthermore, it has achieved this with nearly half the volatility of the index. Manager selection has been key to our performance. Also, our allocation to trading managers has helped historically to provide uncorrelated returns in periods of market dislocation and stress.

This year we have seen strong returns from equity hedge allocations, particularly European long short managers in the third quarter. Positive results from trading managers were primarily driven by discretionary macro and systematic non-trend allocations. In the arbitrage allocations, credit managers had a good third quarter, driven by distressed managers.

TSC: Any new strategies under consideration?

JG: We are looking at new strategies for the offshore markets and investigating the feasibility and demand with U.S. institutions. Examples include emerging-market, long-short and a global arbitrage fund of hedge funds. The idea of the global arbitrage fund comes from the success we had with our multi-arbitrage offshore fund, which has produced approximately 7% return on an annualized basis since its inception in September 2002.