ALO28: Why Hedge Funds Still Matter ft. Alexander de Bruin

11 snips

Feb 12, 2025

In this discussion, Alexander de Bruin, Head of Fund Research at Edmond de Rothschild, shares his expertise in hedge fund portfolio construction. He reveals insights from his background in trading and how it informs his capital allocation strategies. The rapid growth of private markets is explored, highlighting opportunities in private credit. Alexander delves into the nuances of multi-manager funds and the challenges investors face in portfolio selection, emphasizing the importance of due diligence through firsthand experiences on trading floors.

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ANECDOTE

Games Player to Trader

Alexander de Bruin's career began unconventionally when a trader hired him based on his games player background.
This trader believed games players possessed the quick thinking, odds calculation, and money management skills necessary for market success.

INSIGHT

Convertible Bond Trading: A Holistic Market Experience

Trading convertible bonds provides valuable experience across various financial instruments.
This experience includes trading bonds, equities, options, credit default swaps, and interest rate products.

ANECDOTE

From Trading to Allocation

The 2008 financial crisis significantly impacted convertible arbitrage trading, leading to the closure of de Bruin's fund.
This event prompted his move back to Europe and a career shift towards hedge fund portfolio construction for institutional clients.

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In this episode, Alexander de Bruin, Head of Fund Research at Edmond de Rothschild, joins Alan Dunne to discuss the art and science of selecting managers and building portfolios of alternatives. Alexander shares insights from his background in convertible bond trading and how it has shaped his approach to allocating capital. The conversation explores the rapid growth of private markets, with a focus on the current opportunities in private credit. They also delve into Alexander's framework for constructing hedge fund portfolios, examining the role of multi-manager, multi-strategy funds compared to other diversifying strategies. Alexander provides a behind-the-scenes look at his manager due diligence process, including his unique approach of sitting on the trading floor with hedge fund managers to gain a deeper understanding of their strategies.

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Episode TimeStamps:

02:26 - Introduction to Alexander de Bruin

09:08 - The clients and portfolios that Edmond de Rothschild

13:24 - Should the 60/40 portfolio be revamped?

15:45 - de Bruin's approach to implementing new strategies

19:46 - How de Bruin deal with the paranoia of something going wrong

22:33 - Is there a place for multi-strat approaches?

25:14 - The challenges of managing risk as a multi-strat manager

26:59 - How hedge funds deal with portfolio constraints

29:25 - Opportunities and risks in private markets

35:37 - How high yield portfolios are allocated

37:31 - Which managers do they prefer?

39:49 - How to assess hedge funds as a manager and vice versa

44:51 - How de Bruin uses his backgammon experience when selecting managers

47:54 - Move the managers to where there is more edge

50:05 - Where does the disappointment in hedge fund allocation stem from?

53:36 - Are hedge funds becoming more open to high volatility strategies?

54:49 - What are Edmond de Rothschild looking for in managers?

56:41 - Advice for other investors

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