Top Traders Unplugged

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

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.

01:00:06

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Episode guests

Alexander de Bruin

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Episode notes

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Quick takeaways

Hedge fund managers must prioritize risk management and tactical strategies to achieve consistent returns similar to strategies used in games like poker.

Alexander de Bruin's career highlights the significance of practical trading experience in shaping effective portfolio management and manager selection strategies.

Investment portfolios should be tailored to the specific needs of clients, distinguishing between the goals of institutional investors and high-net-worth individuals for optimal results.

Deep dives

The Importance of a Strategic Mindset in Investing

Successful investing is likened to games such as backgammon and poker, where players must analyze the odds and play strategically. Investors seek those who can consistently apply their edge systematically to generate returns without excessive risk. This approach emphasizes the necessity for hedge fund managers to have a clear understanding of risk management while focusing on incremental wins over time. Much like in games, luck is a factor but developing tactics and strategies that put the odds in one's favor is crucial for long-term success.

Intro

2min

From Trading Floor to Hedge Fund Management

20min

The Rise of Multi-Manager Hedge Funds

4min

Navigating Portfolio Constraints in Hedge Fund Investments

2min

Navigating the New Frontier of Private Markets

8min

Navigating Hedge Fund Selection

19min

Essential Advice for Aspiring Fund Researchers

3min

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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