Credit Suisse is extending its alternatives offering in a move that recalls its 2008 shift away from traditional strategies. Stefanie Eschenbacher talks to newly appointed global head of core investments, Tim Blackwell.
Having been the first to receive authorisation under the Alternative Investment Fund Managers Directive (AIFMD) in Luxembourg, Credit Suisse is further adding to its offering in alternative investments.
Tim Blackwell, who was appointed global head of core investments last October, following the sudden departure of Gerhard Fusenig, says that Credit Suisse last year raised most of its new assets for investment in alternatives.
With more than $91.5 billion (€67.3 billion) of its assets invested in alternatives, the Zurich-based asset manager is already one of the largest players in the world.
The year 2008 marked a landmark for the business. Credit Suisse sold a large part of its asset management operation, covering traditional fixed income and equities, to Aberdeen Asset Management, and redirected itself towards alternatives.
Today, more than 75% of its clients are institutional investors, mainly pension funds and insurers, but increasingly also ultra-high-net-worth individuals and family offices.
“We have made a conscious effort not to be a supermarket-type of asset manager and have instead chosen to become highly specialised in a range of capabilities to pursue what we call a multi-boutique structure,” says Blackwell.
Credit Suisse is planning to extend its real estate capabilities, adding products to its Luxembourg platform that will be sold under the AIFMD in Europe.
It is also in the process of launching a number of absolute return strategies on the same platform, while readying a diversified absolute return fund and developing a contingent convertible bond fund.
Although the AIFMD offers asset managers the possibility to sell its products into different parts of Europe, Blackwell says there are still products Credit Suisse designs especially for Switzerland-based investors.
One such example is a fund investing in energy infrastructure that is currently in development. Credit Suisse was one of the first to receive authorisation under the AIFMD in Europe and started using the passport facility to sell its funds into Austria, Germany, Italy, the Netherlands, Spain, Sweden and the UK.
“The concern was in the beginning that we were the first mover and that we would not be able to use the experience of the industry or other players,” Blackwell says.
“But these processes have been quite efficient and we have not encountered any obstacles.”
Today the firm has 19 products authorised for distribution under the AIFMD, and Blackwell states that his ambition is to further strengthen the alternative cross-border fund offering.
Blackwell says the AIFMD is “an important avenue” to distribute into Europe, but investor preferences and regulations differ from country to country, sometimes significantly.
This is particularly true for Switzerland; the country has largely embraced European Union regulation from Brussels, but has managed to retain its own regulatory framework.
Credit Suisse’s expansion into alternatives does come, at least to some degree, at the expense of other areas of the business.
“Clearly, our resources and efforts are dedicated more towards delivering specialised investment content around select strategies,” Blackwell says.
While Blackwell is reluctant to single out one area where Credit Suisse has cut back on a larger scale, he does go on to concede that funds are being consolidated and resources redirected where investments have come under pressure in a current low-interest rate environment.
This was particularly the case for certain core fixed income capabilities. “Those areas are not what we are focussing on, and resources are being redirected towards more specialised investment capabilities,” Blackwell says.
He goes on to add that fixed income core capabilities remain an important element for any long-term institutional investors and will, as a consequence, “not fall away completely”.
Blackwell says individuals, even entire teams, are being transferred from the investment bank into the asset management business to broaden the offering to end-clients.
Where it has traditional equity and fixed income, Credit Suisse has decided to become even more specialised.
Among equity investments, the focus has shifted to long-short, small- and mid-cap, specialised value, and real-estate strategies; among fixed income investments, the shift has been towards emerging market debt, and unconstrained strategies.
Interest in hedge funds, which had come under pressure in the aftermath of the global financial crisis, has also returned.
Credit Suisse has recently launched single manager hedge fund capabilities for its larger investors on its multi-asset solutions platform.
“Hedge funds are increasingly demanded as part of multi-asset solutions,” he says, adding that those are particularly popular among Credit Suisse’s larger clients that are looking to customise their particular needs with multi-asset solutions.
The Credit Suisse Securitized Products Fund became one of the largest hedge funds launches two years ago.
Elsewhere, real estate, senior loans, non-investment grade debt, commodities, insurance-linked investments as well as emerging market debt have all proved to be very popular.
Innovation and further diversifying its product range are Blackwell’s strategic priorities – be it in alternatives or the core investment.
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