Hw exante report 12

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  • 1. October 2012 EXANTE 20122012 2011 36.4% 25%201011% Anti-emotionTrading faster The emergence approach to thanthe speed ofelectronic stocktrading oflight gold?

2. Contents In this issue 03 A one-click approach to accessingalpha By James Williams 05 Volatile markets play into the hands of multi-arbitrage shop MTGCapital Management 06 Trading faster than the speed of light Da Vinci Invest 07 Consistency drives performance ofOctober 2012 WEELS fund Wermuth Asset Management EXANTE 20122012 08 Applying evolutionary ideas to algorithmic trading 2011 36.4%Quantum Brains Capital 25%2010 09 The anti-emotion approach to stock 11% trading Anti-emotion approach to stock trading Trading faster than the speed of lightThe emergenceof electronicgold? Courant Asset Management 10 The emergence of electronic gold? Bitcoin 11 Spirit of entrepreneurism delivers cumulative returns of 480% Platinum PartnersPublisher Special Reports Editor: Simon Gray, simon.gray@globalfundmedia.com Editor: James Williams, james.williams@globalfundmedia.com Sales Managers: Simon Broch, simon.broch@globalfundmedia.com; Malcolm Dunn, malcolm.dunn@globalfundmedia.com Marketing Director: Oliver Bradley, oliver.bradley@globalfundmedia.com Publisher & Editorial Director: Sunil Gopalan, sunil.gopalan@globalfundmedia.com Graphic Design: Siobhan Brownlow, siobhan.brownlow@globalfundmedia.com Photographs: Various Published by: GFM Ltd, 1st Floor, Liberation Station, St Helier, Jersey JE23AS, ChannelIslands Tel:+44(0)1534 719780 Website: www.globalfundmedia.com Copyright 2012 GFM Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. This special report is sponsored by EXANTE and is intended solely to raise awareness of the company and its clients among qualified investors only. It does not constitute an invitation to invest in any of the funds mentioned in the report.EXANTE Hedgeweek Special Report Oct 2012 www.hedgeweek.com | 2 3. OverviewA one-click approach to accessingalphaBy James WilliamsEXANTE is a unique integrated trading and fund platforminfrastructure for self-use only. Our platform is thereforeoffering whose genesis grew out of a challenge faced more intuitive and easy to use in comparison to others.by its five managing partners. All of them came from a Weve made it our mission to design a first-classtrading background and shared a similar evolutionary infrastructure and view ourselves as a benchmark ofpath when working with different brokers and banks transparency in the financial services industry. The factglobally, developing algorithms and trading strategies.that our customers are running successful cross exchangeAs Gatis Eglitis, one of the managing partners, tellsand asset class arbitrage proves that we are fulfilling ourHedgeweek, once they started to launch their own hedge mission statement because the business of arbitragefunds, they encountered a challenge: each time a new requires superior infrastructure and transparent execution.entity was set up for proprietary trading it involved having Although not exclusive, there exists a quantitative/to set up new relationships with counterparties. Actuallyhigh frequency trading slant to EXANTE. This isgetting everything set up and structured was a timely, understandable given the managing partnersinefficient process; something that EXANTEs managingbackgrounds. Picking up on the trading challengespartners observed was also proving to be a problem for referred to earlier, Eglitis explains: Every asset managerfellow friends running asset management businesses.faces an exhausting relationship establishing processesTo meet this challenge, EXANTE was established with counterparties. They find themselves having toin March 2011. It received its licence from the Maltadeal with multiple brokers and departments to negotiateFinancial Services Authority end-June 2011. Unlike commercial conditions, credit lines, risks and connectivityother fund platforms, EXANTE is an organic institution,issues. In some cases this process is so slow thatblending multi-asset fund support with first-class trade either market opportunities or customer assets startexecution services using a sophisticated technologyfloodingaway.infrastructure.This story is common to all managers that deal withSays Eglitis: We know exactly what are the needsmultiple asset classes like currencies, fixed income,of fund managers. We talk the same language, whencommodities, stocks and futures. They end up jugglingthey ask for a service we immediately understand numerous platform providers, connectivity gateways, datatheir requirements because weve been in their shoes.vendors, and are forced to deploy a sophisticated buy-Similarly to grandmas cookies which taste muchside back office tool to calculate the portfolio NAV at thebetter than those from a store, we initially designed theend of each day.EXANTE Hedgeweek Special Report Oct 2012www.hedgeweek.com | 3 4. Overviewhedge funds on such a platform. The fact that all thefunds are listed means investors can rotate into and outof different managers as they wish, and actively managetheir portfolios directly. They can either build their ownfund of funds, or choose to diversify their risk and takebroad exposure by investing in the index of managerswhich EXANTE is now building.This allows investors to ultimately have full control oftheir investment, instead of depositing with a bank whererisk is not transparent and the premium is close to zero,says Eglitis.Secondly, all the funds listed on the system have gonethrough due diligence. That sets it apart from other funddatabases which list funds, but cannot claim to havedone due diligence on every one. There are lots offunds that we have approached from various databasesGatis Eglitis that we cannot place on our system because we arereluctant to expose our customers to such managers. So the niche to us was obvious: we couldnt findWhat we offer is quality content, states Eglitis.any broker giving quality DMA access to all markets and Third is the level of transparency it offers clients.instruments with competitive conditions, advanced STP People can see the performance and price of each fundcapability and real-time risk monitoring from one account.just like any other financial instrument. Going forward,We created the business for ourselves to overcome these Eglitis says the platform will provide full fund profiles andproblems and complexities, using the best technologyallow users to filter their searches: either by geography,ingredients. Today we share this solution with our friendsstrategy, size of fund or other criteria.and asset managers facing similar challenges.On manager selection, Eglitis stresses that the critical Trading and hedge fund listing are two separatefactor is the ability to generate meaningful alpha. In thatcore offerings with EXANTE. The latter is a similar sense, EXANTE is not too concerned about the typesconcept to fund listing on an exchange with the soleof strategies on the platform, but rather their quality.difference being that it is done on a trading platform. OnWhat counts when assessing a manager is the auditedthe platform, hedge funds are treated similarly to cash historical performance chart as this shows past volatility.equities. For any manager wishing to join the platform, If performance is exceptional we make sure that there iswhich already includes a number of billion-dollar funds,nothing lying underneath the tip of the iceberg. If not, weEXANTEs team works closely with them discussing theare happy to work with them and list their fund.strategy in detail, and ultimately deciding whether the One interesting future development will be the creationmanager is good enough to list on the platform. of a ratings system for those managers listed on the EXANTEs fund platform is potentially a game-platform. This, though, is not an immediate focus: ratherchanger for the industry. Currently, it has 35 investment its on building out the index. Eglitis explains how thismanagement companies, managing around 100 funds.is created: We take the 20 top performers to currentlyThe one-point-click model gives investors the opportunity construct the index. Going forward, that figure will climbto invest directly in those funds. More importantly, forto 50, 100, as we look to develop a benchmark of tophedge fund managers they can trade fast and efficiently,performers across all asset classes. The managersacross asset classes, in addition to benefiting fromchosen will be based on a series of quantitative andthe marketing opportunities that arise from listing and qualitative criteria such as year-on-year returns, Sharpepotentially attracting new investors. Ratio, Sortino Ratio, managers edge in the field, etc. Anyone can view the funds. Potential new clients can Such has been the success of the underlyingsimply download a demo for free, familiarise themselves managers over the last two years that If you hadwith the interface and the funds composing EXANTEs invested in the EXANTE Hedge Fund Index in Marchindex, and decide whether to open an account or not.2010, youd currently be up 36.4 per cent, notes Eglitis.Minimum investment, confirms Eglitis, is USD1million. Actual AUM on the platform is USD1.5billion. Lookingahead to the remainder of the year, Eglitis comments:Key platform features We already have a pipeline of 100 managers. We hopeThe first point to emphasise is that no one else is givingto have 100 managers listed on the platform includingqualified investors the opportunity to directly invest into the 35 existing managers by the end of the year. nEXANTE Hedgeweek Special Report Oct 2012www.hedgeweek.com | 4 5. M T G C a p i ta l m a n a g e m e n tVolatile markets play into the handsof multi-arbitrage shop We real