Paul Zummo, Chief Investment Officer of J.P. Morgan Alternative Asset Management, shares insights from three decades in hedge fund investing. He reflects on how the industry has evolved from limited data to a focus on quantitative strategies and emerging managers. Zummo discusses the significance of risk management and due diligence in selecting hedge fund managers. He highlights the importance of cultural assessments and networking, along with the complexities of maintaining a balanced portfolio that includes early-stage managers.
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insights INSIGHT
Evolution of Hedge Fund Investing
Hedge fund investing has drastically evolved with data availability, strategy diversification, and risk management improvements.
Early challenges included manager identification without the internet and dominance of macro and long-short strategies.
volunteer_activism ADVICE
Skepticism in Manager Selection
Be skeptical in manager selection but maintain a balance between skeptics and optimists on your team.
Underwrite managers rigorously by focusing on risks and scenarios that could break the strategy over long-term horizons.
volunteer_activism ADVICE
Run Towards Market Fires
Don't shy away from investing during periods of market dislocation; these are opportunities to buy thoughtfully.
Smart investors can capitalize on volatility by carefully identifying where to 'run into fires'.
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Paul Zummo, Chief Investment Officer of J.P. Morgan Alternative Asset Management, joins Kumar Panja, EMEA head of the Capital Advisory Group at J.P. Morgan, as they celebrate 30 years of investing in hedge funds and other alternative asset classes. Zummo contrasts the early days, characterized by limited data and conventional strategies, with today’s landscape, which features emerging managers along with quantitative and multi-strategy funds. With $33 billion in assets under management following the merger with the Private Bank, Zummo emphasizes the importance of robust risk management, disciplined due diligence, thorough referencing and careful cultural assessments in selecting hedge fund managers.
This episode was recorded on May 22, 2025.
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