ZURICH (Reuters) - Swiss fund of hedge funds manager Gottex GFMS.S said it would slash running costs by 15 percent in 2012 after assets fell by some $1 billion (637 million pounds) from a year earlier as some large clients pulled money in order to invest directly in hedge funds.
The fund’s assets under management have fallen to $7.34 billion, less than half the $15.6 billion the company had in June 2008 before the worst effects of the financial crisis hit.
“Getting money into hedge funds is not an easy task for the moment,” Gottex Chief Executive Joachim Gottschalk said, referring to fund of hedge funds. “Asset raising is difficult, though outflows are within normal parameters,” he told Reuters.
He said one major headwind for funds of hedge funds is that many large pension plans are now looking to invest directly in hedge funds rather than relying on the fund of funds model.
Gottschalk said his company is looking to its managed accounts and advisory businesses to turn asset flows positive again. Even so assets in GSS, the fund’s managed account platform, fell for the second consecutive quarter.
“We’re looking at monitoring risk for some bigger pension funds and offering them access to some of the funds universe,” he said.
Investor demand for managed accounts -- personalised portfolios which give investors visibility and control over their assets -- has grown since the financial crisis.
The hedge fund sector in general could struggle to raise money this year after experiencing one of its worst annual performances in 2011 when the average fund lost 4.8 percent, the second negative year in the last four.
Gottschalk also said he saw Asia as the company’s main area of growth, and that Gottex would be prepared to make acquisitions to expand in the region.
“Asia should be our growth area. With the right people, we would expand our Asia footprint,” he said.
The company’s flagship “market neutral” products fell slightly in 2011 but outperformed the average 4.8 percent loss suffered by hedge funds during the year, while its credit strategy and multi-strategy fund returned 3.8 and 3.4 percent respectively.
Shares in Gottex were down 1.6 percent at 1141 GMT, against a 0.6 percent fall in the Swiss small and mid cap index .SSHI. They have fallen 6 percent this year after plunging 55 percent in 2011.
Gottex is due to report 2011 results on March 27.
Reporting by Martin de Sa'Pinto. Editing by Jane Merriman