Q: Do you think liquid alternatives such as hedge funds are now regaining relevance as investors reassess liquidity risk?
A: Absolutely — and the irony is that many multi-strategy hedge funds have themselves become less liquid as lock-up periods have lengthened. So investors are caught between two illiquidity problems: private markets on one side, and increasingly locked-up hedge funds on the other. Some managers are positioned at the more liquid end of the spectrum, which matters when investors may have 30% or more of their portfolio in structures they can’t easily exit.
The ability to rebalance, or respond when markets move fast, has value — and that value compounds during periods when privates are hardest to mark and sell. Liquidity isn’t just defensive — it’s the ability to redeploy when dislocations emerge and others are forced to sell. Many multi-strats are running elevated beta to equity markets. Some strategies target neutral equity beta, offering diversification versus equity-correlated approaches.
Q2. What differentiates a successful multi-strategy investment platform today — manager selection, capital allocation between strategies or risk management?
A: You can’t cleanly separate them, but many over-index on finding alpha and under-invest in understanding it. Headline PM metrics like hit rate and entry skill have limited predictive power. What helps predict persistence is win/loss ratio, sizing discipline, and exit skill.
If you can distinguish exogenous from endogenous periods of negative performance — losses driven by the market versus manager skill — you can retain conviction through drawdowns that a crude stop-loss framework would exit. The payback from that patience can be significant. Capital allocation follows from that understanding. Greater transparency into risks and correlations can enable more dynamic allocation, which was more difficult under traditional fund-of-funds models.
Q: From a CIO perspective, systematic vs discretionary—how to allocate?
A: The diversification benefit between the two approaches is widely observed. Systematic strategies win on breadth and discipline: thousands of securities, hundreds of signals, precisely controlled risk. Discretionary managers earn their keep at inflection points, when regimes shift and models need time to adapt.
A 50/50 blend within a single strategy is difficult — neither approach dominates. An 80/20 tilt in either direction can work, while holding both at the portfolio level allows them to perform at different times. The gap is narrowing, and the distinction may matter less over time — and firms still organised around that binary will be at a disadvantage.
“Liquidity isn’t just defensive — it’s the ability to redeploy when dislocations emerge and others are forced to sell.”
Q4. How should portfolios adapt to higher rates?
A: What matters most about higher rates is what the environment enables. The corporate landscape is more differentiated, fundamentals matter more, and credit markets offer attractive yields with dispersion. Some investors are using market-neutral strategies in portable alpha formats, reframing the conversation around alpha layered on beta — it becomes about alpha layered on a beta exposure that itself can be made smarter and more defensive.
Trend-following strategies can also play a role, offering convexity to sustained equity drawdowns, particularly in portfolios heavy in equity beta and private assets. Investors are also scrutinising alignment: in pass-through multi-strats, investors retained less than half of gross profits in both 2023 and 2024. Fee structures and alignment are also coming under scrutiny.
Q: Many allocators argue that genuine alpha is becoming harder to find. Where are inefficiencies today?
A: The performance gap between multi-strategy funds and the broader hedge fund industry has widened, particularly post-Covid. Aggregate hedge fund alpha had been in long-term decline, but that trend has started to reverse — and multi-strats have led the way.
Equity market-neutral strategies continue to work when stock dispersion is elevated. Event-driven strategies like merger arbitrage have been supported by a strong M&A pipeline, while traditional relative value — convert arbitrage, fixed income arbitrage — has a richer opportunity set in a normalised rate environment.
Less crowded areas like emerging markets small caps, longer-horizon strategies, and Japan — where governance reform is improving the investment backdrop — also offer opportunities.
Perhaps the biggest shift over twenty years isn’t that alpha is harder to find; it’s that the infrastructure required to extract it efficiently has become the barrier to entry. Technology, risk management, execution, counterparty relationships compound over the years, and you can’t shortcut them.
Q: Your appointment marks the first time in years that Man Group has had a firm-wide CIO. What problem was the role created to solve?
A: Man Group has deep investment content, but from the outside, it can look complicated. The CIO role is intended to improve coordination and shared infrastructure between investment engines that have historically operated independently. This includes sharing research, leveraging common technology, and combining quant and discretionary perspectives where they are additive.
Coordination without constraint remains a challenge. Culture plays a key role, particularly in maintaining autonomy for portfolio managers, while building infrastructure to support collaboration where it adds value.
It also requires continuous innovation across strategies, supported by a diversified platform that invests through all market conditions. The role includes building infrastructure to enable collaboration where it adds value.
