Signet FFF publications
The Sum Is Greater Than The Parts For Signet FFF
By Greg Winterton - 15 April 2021
Greg Winterton of AlphaWeek interviews Dmitry Evenko, Member of the Board, Signet FFF Holding Limited
In 2016, Signet Capital Management Limited ("Signet"), which was a significant player in the fund of hedge funds business in the early- to mid-nineties, sold a stake to the majority shareholder of Limassol, Cyprus-based FFF Asset Management Limited ("FFF"). By that time, Signet had merged with Spectrum Partners, an emerging markets-focused hedge fund firm founded by Dmitry Evenko; in 2021, Evenko, now a Senior Partner at FFF and Director at Signet, is spearheading the transformation of both firms into a single entity, Signet FFF.
Technically - at least, for now - Signet FFF is two different companies, FFF and Signet. The former has real estate and private equity interests, but FFF's flagship product is a fixed income hedge fund. Signet is based in London and manages a quantitative macro fund and a fund of hedge funds; Signet's flagship product is a global equity UCITS fund which invests mainly in the technology, healthcare, entertainment and leisure sectors.
"There's an element of Blackstone in what we're offering;" said Evenko. "We have investments in hedge funds, private equity and real estate. It's about offering a helicopter view for our investors."
"The equity UCITS fund is a legacy offering of Signet's UCITS plat form. Launched in 2010, the platform eventually warehoused strategies sub-advised or managed by external managers. That strategy no longer exists, with Signet FFF more interested in launching internally managed products."
"Signet had a platform with five UCITS funds, each managed by an external manager, each in high yield fixed income. It didn't grow, so we decided to do it all in-house; said Evenko. we like the UCITS format because
it allows us to sell strategies to the broader public. For us, this is an efficient way of distribution because even though the strategy is managed by us, distribution is almost automatic as investors can just buy
the units at exchanges. We expect this to become a corner stone of our business."
Signet FFF's equities' products are all long-biased. Their expertise focuses on the healthcare, technology, and entertainment/leisure sectors, something that, for Evenko, ties into a belief with regards to how long alpha is best generated.
"We believe in specialisation. It's just not possible to cover everything," he said. "so, we've assembled teams of experts in these areas because you need to understand your sector to create alpha on the long side."
Hedging in the equity products is done largely via index derivatives, with little regard for chasing alpha on the short side.
"We don't do a lot of alpha shorts because we're not experts at that. Something like 30% of all hedge funds are long short equity, so I don't see what we can add there. Also, I think investors are more interested in specific investment themes and so funds that are more specialised are more attractive to investors," said Evenko.
It's a little different in fixed income. Signet FFF's only true absolute return product is designed to embrace an entire fixed income allocation given the challenges in delivering alpha on the long side in that market.
"Right now, it's very difficult to make money in fixed income, long-only port folios so we actively rotate the portfolio between the various instruments with in fixed income. We invest in anything we want - apart from junk bonds -as long as it's within our limits. We take quite a holistic approach to fixed income investing because we think that's necessary to be able to deliver returns in that asset class."
Signet FFF opened an office In Zurich, Switzerland 18 months ago and will shortly apply for a license from FINMA, the country's financial markets regulator. Having a presence in Switzerland makes sense so that they can access capital in the country's famous wealth management industry, but Evenko says that Signet FFF sees other opportunities that should come from having a presence there. "All wealth managers now need a license in Switzerland, and for some of the smaller ones, the costs will be too high for them to continue so these companies will need to either close or merge with another. We want to grow organically but we are very interested in M&A and Switzerland is the most interesting place to acquire assets and teams with assets. We're excited about the opportunities in Switzerland;" he said.
Alongside growth via M&A, Signet FFF has plans to launch additional UCITS funds in 2021, again based around a certain theme and/ or sector, but Evenko and his colleagues on the management and ownership team already
have one eye on the future.
"In the short term, we see ourselves as a kind of incubator. We want to create a platform where talented managers can make money for our investors, and in turn, themselves. And the shareholders of the business are commercially oriented businesspeople; we don't exclude the possibility of an IPO or sale to a strategic partner in the next five to ten years and we're trying to create value outside of performance to that end. But ultimately, we'll only be successful if we make money for our investors, and that's what we're focused on."