By any measure, 2004 has been a successful year for boutique funds manager St Helens Capital. The company is only three-years-old yet it has attracted $150 million of funds under management with returns of 41 per cent since its inception in January 2002.
It was also singled out for the winning place in Money Management’s alternative assets category of the 2004 Fund Manager of the Year awards.
St Helens is a hedge fund manager specialising in the top 100 companies on the Australian Stock Exchange. Its target is to give absolute returns of between 12 and 15 per cent, regardless of market conditions.
Managing director Michael Brookes says a long/short strategy is the core to the fund manager’s ability to achieve these projected returns.
Brookes says a belief that his expertise in investment could provide better returns for investors was the reasoning behind setting up the boutique operation.
“I come from an investment banking background focusing on absolute returns, while my partner Peter (Cozens) has a research background,” he says.
“We have outsourced the back-office to UBS to concentrate on the investment side of the business.”
The Sydney-based fund manager, however, has a global approach to attracting clients. Brookes says the bulk of its clients are from overseas, with a few in Australia — which is indicative of a local retail hedge fund business.
“Most boutique fund managers in Australia are a small version of long funds,” he says.
“We are different in that we have a global model for hedge funds and, as a result, 75 per cent of our inflows come from overseas investors.”
Brookes says this model is yet to be recognised in Australia.
“Last year I probably only saw five people in Sydney who were looking at investing in our fund, but none did,” he says. “But overseas I saw about 40 people and about half invested with us.”
Brookes says that is why financial services distribution operations, such as platforms, are not ringing them up to offer their services.
However, the boutique funds manager is growing at a steady rate and he predicts some funds will close as early as next month.
“We are probably half way with the amounts of funds under management we want,” Brookes says. “We do have capacity arrangements with our core investors, so we are not seeking funds under management for the sake of it.”
