Investor Dialogue: Tim Rainsford

The managing director for Man Investments in Asia, Tim Rainsford, talks about managed futures as a diversification tool and about opportunities in the onshore markets.
Tim Rainsford
Tim Rainsford

How did you get started at Man Investments?
I had been working in Asia since 1996 for Jardine Fleming and then at J.P. Morgan in Hong Kong, Korea and Japan before moving back to Australia and joining Man Investments in 2003. Man is the world’s largest independent alternative asset manager, offering a comprehensive range of transparent trading strategies across the liquidity spectrum. Following the recent acquisition of the multi-strategy specialist GLG, the business currently has around $63 billion of assets under management globally (as of October 14, 2010).

So you joined Man Investments in Australia. Tell us more about the company.
Man established its office in Hong Kong in 1995, covering Asia, and the business has been growing steadily in the region since then. The Asian business now contributes a significant part of the group’s global assets. The team here comprises product structuring, sales and marketing, compliance, and operations, allowing Man to meet the regulatory requirements of the various jurisdictions and to tailor the group’s offerings for individual markets.

When did you move here?
I relocated back to Hong Kong in early 2007. During the past few years we have significantly increased our footprint around the region. We have opened an office in Singapore and built out our sales and marketing activities that support the region. We launched the first onshore fund of futures fund in Taiwan in 2009 with a strong local partner and have received approval for a Ucits managed futures fund in Singapore dollars, which is managed by AHL. This is the first fund of its type to be recognised in Singapore and it launched on November 1.

Tell us about your flagship fund in Hong Kong -- the Man AHL Diversified Futures fund.
Our Hong Kong office has launched a series of onshore funds for the local market since 1998, among them, the Man AHL Diversified Futures is a well recognised open-ended fund for retail investors. The fund is managed by AHL, Man’s industry–leading quantitative managed futures manager. The fund targets substantial medium-term capital growth, while controlling risk. It has historically behaved differently from stocks and bonds and hence it is a valuable tool for diversification. The fund has recorded an annualised return of 11.4% since its inception in 1998 (until September 27, 2010) and demonstrated low correlations with world stocks and Hong Kong stocks, which were -0.30 and -0.11 respectively, during this period.

Have you got similar products in the rest of the region?
As I mentioned earlier, Man has a history of bringing onshore funds to many parts of the world. In Asia, we successfully launched the first onshore futures fund in Taiwan last year and had a managed futures fund recognised in Singapore recently. We continue to work closely with regulators around the region in order to identify opportunities in the onshore space. This can often take many years but is well worth the effort.

How is AHL different from other managed futures managers?
AHL is an industry leading commodity trading advisor (CTA) manager and trades in more than 150 world markets in currencies, bonds, equities, commodities and interest rates. The strategy is systematic in nature, aiming to capture and profit from price trends. The manager adopts a quantitative approach to investing and believes that market behaviour can to some extent be predicted, and this can be taken advantage of through specialised computer trading systems.

How do you do that?
A commitment to ongoing research and continuous investment in people and systems maintains the originality of AHL’s investment approach. AHL has the largest and most experienced research team in the industry (80 researchers as of September 30). Its acute focus on cutting edge research is reinforced through Man’s funding of the Oxford-Man Institute, a unique collaboration with the University of Oxford, and the creation of the Man Research Laboratory, which currently houses 11 researchers. The academics of the Oxford-Man Institute and AHL’s researchers in the Man Research Laboratory share purpose designed premises, where AHL’s researchers have already developed several valuable commercial applications. Now in its third year, this arrangement has created a stimulating environment that fosters day-to-day interactions between AHL and the university’s academics and students, and has provided AHL with exposure to leading academic thinking from a worldwide network of experts and wide spectrum of disciplines.

The AHL investment team is supported by a robust and finely-tuned trading and execution infrastructure, operating 24 hours a day on a rotational eight-hour shift structure. The team added an Asia trading desk in Hong Kong last year to complement the existing UK-based execution operations, develop closer working relationships with the local exchanges and facilitate expansion into new asset classes within the region.

Where do you see the broad trends and opportunities for managed futures?
One of the main benefits of the managed futures strategy is its low correlation with traditional asset classes, such as stocks and bonds. In 2008, for example, managed futures enjoyed a stellar year against a backdrop of meltdown for the financial world, gaining 17.8% (according to the CISDM CTA Asset Weighted Index) when world stocks were down roughly 40% (MSCI World Index (Price) return). It once again demonstrated its ability to withstand market turmoil and its potential as a valuable portfolio diversification tool.

With an increasing amount of money currently spent on researching and developing quantitative trading models such as the managed futures strategy, it is clear that this trend is here to stay. As long as clear price trends emerge, whether bearish or bullish, algorithmic models can generate clear trading signals, creating potential for returns.

If there was one piece of advice you would give investors as a “must-do” thing they should think about before investing, what would it be?

Try to avoid chasing last year’s returns. To build wealth, maintain good diversification and at least a medium-term outlook.

And what’s your big no-no? What would you say investors should be sure to always avoid doing?
Don’t listen to the taxi driver when he offers you stock market tips or investment advice. When this happens you can be pretty sure that we are near a top.

 

The article was first published in the November 2010 issue of FinanceAsia magazine

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