Capital Allocators – Inside the Institutional Investment Industry Luke Ellis – The Man Behind The Man Group (Capital Allocators, EP.214)
Sep 20, 2021
In this engaging discussion, Luke Ellis, CEO of Man Group and Deputy Chairman of the Standards Board for Alternative Investments, dives into his extensive experience in the hedge fund world. He reflects on the evolution of capital allocation and the importance of innovation in investment strategies. Luke emphasizes the need for patience in investing and explores the balance between nurturing young talent and retaining seasoned professionals. He also shares insights on harnessing technology for better decision-making and the challenges of expanding into private equity.
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Early Hedge Fund Exposure
- Luke Ellis's first exposure to hedge funds was at JP Morgan in 1991, where he ran the equity derivatives business.
- It involved prop trading strategies like convert ARB and event ARB, which he later realized resembled hedge fund activities.
Fund of Funds Journey
- After leaving JP Morgan, Ellis joined a fund of funds, initially without a formal contract.
- The fund grew from $50 million to over $15 billion during his ten-year tenure, marking the golden era of fund of funds.
Hubris and Alpha
- Ellis observed that hubris hinders success in the hedge fund world.
- He also learned that asset allocation is less effective in alpha space, emphasizing the importance of manager selection and a repeatable alpha source.