GAM's Gieger Talks Return

TSC: There is no central chief investment officer at GAM. Describe your approach to investment management and how you coordinate all the different strategies.

JG: GAM's expertise in single-manager hedge funds is derived from the fact that we allow our managers to manage their funds according to their own unique processes and market views. We have managers internally that differ in style considerably, from small-cap to large-cap, from deep-value contrarians to systematic stock-pickers. They provide GAM with a valuable source of differing market views and allow for lively debates and exchanges of information.

Within the multi-manager team, David Smith, chief investment officer, has been with GAM since 1998.He and his team work with managers on the ground around the world, taking the pulse of the markets in which they invest. We give each the autonomy to make investment decisions while we monitor their performance and ensure that they follow their funds' investment mandates. In fact, that is one of the underlying strengths of our firm. We're not trying to be a McDonald's here.

TSC: GAM has been recently acquired by Julius Baer. Talk to us about the institutionalization of hedge funds. Is it a good thing for the industry?

JG: The institutionalization of hedge funds is a function of the marketplace and the increased sophistication and education of both consultants and clients. Having clear processes, correct levels of investment and operational due diligence, as well as clearer levels of transparency, are all good things in my mind if they provide investor protection.

TSC: How do you protect your investors from fraudulent managers? What's your due diligence process?

JG: GAM will always seek to avoid such investments and managers. We have a dedicated nine-person operational due diligence team, which includes accountants and lawyers who conduct thorough reviews of documentation, conduct on-site visits and review hedge fund processes and their providers' processes. Sometimes our due diligence teams will make recommendations for a manager to improve his or her processes. This is based on GAM's extensive dealings with other underlying hedge funds and identifying their best practices.