Steve Shepherd

Global quantitative and systematic asset management firm, Capital Fund Management LLP (CFM), has announced that its CFM IS Trends Trust Class A and CFM ISDiversified Trust were both rated ‘Recommended’ by independent ratings house Zenith.

Commenting on the ratings, CFM’s Head of Asia Pacific, Steve Shepherd said that he was pleased that Zenith continues to clearly recognise the quality of CFM’s algorithms and investment processes, which are based on scientific research and sophisticated information technology systems.

“Australian wholesale investors’ interest and commitment to quantitative-based alternative-risk premia strategies has been steadily increasing, because strategies like trend following, momentum and value have proven themselves to be a way to access returns, as well as diversification, at a competitive fee,” he said.

Mr Shepherd said that alternative beta strategies seek to capitalise on structural inefficiencies in the markets. One example of these inefficiencies is the so-called herd instinct, which can lead people to do what others are doing, rather than using objective information. Such irrational human behaviour can lead to structural inefficiencies in markets – something CFM capitalises on to create performance for investors.

“At CFM we apply a scientific approach to exploit inefficiencies by identifying plausible and repeatable market patterns, and aiming to offer investors low-correlation, cost efficient, liquid investments.

“Over three-quarters of our people are researchers and developers – and we pride ourselves on our culture of creativity and intellectual rigour, so it is pleasing to see Zenith call out our research team’s track record of success, and to describe them as ‘highly regarded’,” said Mr Shepherd.

In awarding the ratings, Zenith cited CFM’s “impressive pedigree in quantitative investing, a highly regarded research team and a model with demonstrated success”. Criteria include investment personnel, security selection, portfolio construction, risk management, organisational strength, as well as risk-adjusted performance. Funds rated “recommended” are deemed strong investments – and typically rank in the first quartile on most criteria.

In conclusion, Mr Shepherd said that CFM intends to continue to expand its presence in Australia, following the opening of a permanent office in Sydney and the appointment of two investor relations directors.

“We are committed to servicing and growing our wholesale client base which includes institutions, wealth management and dealer groups, as well as family offices. We are always pleased to have independent ratings houses, like Zenith, give our funds the tick of approval, and reinforce our view of their quality,” said Mr Shepherd.

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Craig Stanford

Global alternative beta manager Capital Fund Management (CFM) is pleased to announce the appointment of Craig Stanford to the newly-created role of Director, Investor Relations for Australia. Mr Stanford is based in Sydney and reports to Steve Shepherd, Head of Asia-Pacific at CFM.

Mr Stanford brings with him over 20 years of experience in investment management, having worked in various asset management firms in London, including ABN Amro. His former role was Head of Alternative Investments at Morningstar in Sydney.

“CFM is a leading alternative investment manager, with a track record dating back to 1991. In fact, I have known the firm, people and products for some time, and first invested with them over a decade ago. CFM has always sought to understand the needs of investors and educate them as to the role of alternative investment strategies as both portfolio diversifiers and return generators. Their academic focus and long term approach really appeal to me, and it’s a huge privilege to now be working with them,” commented Mr Stanford.

Mr Shepherd said that “the Investor Relations role is crucial for CFM as it continues to expand its presence in Australia”.

“We were looking for someone with strong relationships and a solid understanding of the local institutional and retail markets, who could also understand and communicate what can come across as very high level, scientific topics”.

“Fortunately, we have found the perfect fit in Craig, with his in-depth understanding of alternative strategies and their benefits. Just as importantly, Craig is able to translate our sometimes highly complex approach into tangible themes, and has a great deal of experience with institutional investors in Australia, the UK and South Africa,” said Mr Shepherd.

Mr Stanford’s appointment follows the establishment of a local permanent office in Sydney late last year in order to service its burgeoning institutional businesses in Australia. Mr Stanford will be responsible for growing the Australian business working with institutional investors and wholesale investors, including Financial Advisors and platforms.. He will work closely with Mr Shepherd and Mark Yetman, who joined CFM as Director of Investor Relations last year.

Mr Stanford said CFM’s approach to the Australian market demonstrated its long term commitment to the market and local investors. 

“Even before opening their permanent office in Sydney, CFM had worked to establish a strong presence in the Australian market, and were highly regarded by their investors. Now, with a staffed  permanent office based in Sydney, we have the opportunity to work alongside investors to demonstrate how alternative beta can fit into their portfolio,” said Mr Stanford. 

Currently, CFM Australia has over US$9.7 billion in funds under management. Demand is also growing from wealth management and dealer groups, as well as family offices, and CFM’s funds are already available on many of the major platforms.

In conclusion, Mr Shepherd said that Mr Stanford’s appointment is an important next step in the relationship between CFM and Australian investors.

“The portfolio diversification benefits of alternative beta strategies can’t be underestimated, particularly in volatile times, so I’m pleased that we are now able to offer them to more investors,” he said.

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Mr Yetman’s appointment and the establishment of Capital Fund Management LLP Sydney branch will enable CFM to better service its  growing institutional and retail businesses in Australia. Mr Shepherd said that the addition of Mark to the firm will bring a positive boost to CFM’s Australian efforts.

“The investor relations role is a crucial position as we continue to build our presence on the ground in Australia. Happily, we have found the perfect fit in Mark, who has a detailed understanding of alternative beta strategies and their benefits. In addition, Mark has a great deal of experience with institutional investors as well as financial advisers in the Australian and the wider Asia-Pacific markets, and has a track-record of successfully growing a business,” said Mr Shepherd.

Prior to joining CFM, Mr Yetman spent 13 years at Dimensional Fund Advisors, most recently as Vice-President, Head of Institutional Sales. During his time at Dimensional, Mr Yetman was instrumental in raising and retaining assets under management, and transforming Dimensional into one of the top-10 US-based managers operating in Australia.

Speaking about his role at CFM, Mr Yetman said he is excited to be joining a company known as a pioneer in alternative beta strategies.

“CFM has a track-record of over 27 years at the cutting edge of alternative beta strategies and, in my opinion, offers some of the best funds in the market. The robust academic focus really appeals to me, and I am also looking forward to working with the excellent team of people I have met at CFM.

“At the moment we have over US$11 billion in funds under management, principally from institutional investors. However, demand from wealth management and dealer groups, as well as family offices, is growing exponentially now that our funds are available on seven major platforms: Macquarie Wrap, Netwealth, Colonial First State, BT Financial, Hub 24, Mason Stevens and Powerwrap. I have a keen focus to further improve our distribution, and therefore access, to alternative beta strategies for both institutional investors and advisers,” said Mr Yetman.

In conclusion, Mr Shepherd said that the opening of the new office, and the appointment of Mr Yetman are the next developments in CFM’s continued commitment to Australian investors.

“The portfolio diversification benefits of alternative beta strategies can’t be underestimated, particularly in volatile times, and I’m pleased that we can offer them to more investors,” he said.

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Steve Shepherd

Australian financial advisers are demanding low-cost, easily accessible alternative beta strategies as they seek to diversify portfolios and reduce their correlation to equities in face of ongoing concerns around risk.

That’s according to Steve Shepherd, Head of Asia Pacific for alternative beta manager Capital Fund Management (CFM). Mr Shepherd says demand for the CFM IS Trends Trust (CFM IS Trends), which offers investors a global diversified exposure to long term trend following strategies, has been growing steadily since it was launched in Australia in July this year.

“Financial advisers want to offer their clients alternative investment strategies, which provide diversification benefits beyond indexing. Long term trend following provides diversification benefits to portfolios. It is a strategy which takes advantage of trends in 5 global asset classes and in over 100 markets, bringing a diversifying strategy to portfolios. It has the potential to improve portfolio returns and reduce drawdowns,” said Mr Shepherd.

Mr Shepherd explained that recent ‘Recommended’ ratings by Lonsec and Zenith, and the addition of CFM IS Trends to the HUB24, Netwealth and Macquarie Wrap platforms, means that more investors can access the fund, and that advisers have confidence that it is true-to-label.

“At the same time, our fees are very competitive. Lonsec actually stated that CFM’s lower fees give it the potential to disrupt what has been a high margin sector,” Mr Shepherd said.

Mr Shepherd went on to explain how alternative beta strategies work and why they perform an important diversification role in a portfolio.

“Alternative beta strategies seek to identify and exploit alternative betas, or risk premia, via a rules-based, quantitative approach.

“They are strategies which have historically been associated with hedge funds, which aim to produce ‘absolute returns’ – in other words, performance in all market conditions, regardless of whether the market is rising or falling.

“Portfolio diversification is improved at the same time, because alternative strategies look to produce a return profile which has little or no correlation to traditional asset classes,” he said.

In conclusion, Mr Shepherd said that CFM’s point of difference is the rigour of the academic techniques used to stringently test every investment strategy, and CFM’s ability to harness the opportunities on offer from massive shifts in data proliferation globally.

“This is how we identify the diversified, liquid and cost effective scalable strategies more and more investors are looking to invest in,” he said.

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CFM Alternative Beta has pioneered an award-winning approach to financial markets. Its global diversified alternative beta strategy has resonated strongly with Australian financial advisers and investors. Funds under management has grown to $47 million since the Fund’s introduction in November 2015.

Head of CFM Asia Pacific, Steve Shepherd said the Zenith rating caps a strong 2016 and follows other notable milestones including a Lonsec “Recommended” rating, and a “Superior Rating” awarded by SQM in April 2016.
“The Fund has been designed to offer investors a diversified portfolio of well-known and persistent alternative strategies that can be systematically harvested from markets, but at a fraction of the cost of the typical ‘2 and 20’ model*, and with far greater liquidity,” Mr Shepherd said.

“These attributes have been recognised by financial advisers looking for true-to-label alternative solutions that aim to have zero correlation to equity and bond markets, whilst aiming to deliver returns of cash plus five per cent per annum, with constant volatility of six per cent per annum (over a full investment cycle).”

Key points from the Zenith rating:

Stephen Robertson of Winston Capital – the Australian distributor of the CFM Diversified Alternative Beta Fund – said key aspects of the Zenith Recommended rating reflect the increasing value placed by financial advisers on strong alternative beta investments.

“The entry of high-quality global managers like CFM into the retail marketplace has enabled financial advisers to access true-to-label investments with proven track records of delivery against defined risk and return objectives.
“Zenith noted that it believes the Fund offers investors an ‘attractive multi-strategy investment solution, which is supported by a high-quality team, with a long history in developing and managing quantitative alternative hedge fund strategies’, he said.”

“Zenith also noted that: ‘CFM is one of the global leaders in multi-strategy hedge funds, in which their flagship strategy is closed for investment and maintains a long waiting list of clients. CFM has partnered with Winston Capital Partners (Winston) to distribute the Fund in Australia. Zenith has a positive view of this type of arrangement given Winston specialise in retail distribution within the Australian market’, Mr Robertson said.”

“Zenith believes the Fund offers investors a relatively low cost way to gain exposure to a liquid and diversified portfolio of hedge fund strategies which is backed by a well-resourced and pedigreed quantitative hedge fund capability.”

The CFM ISDiversified Trust is currently on the investment menus of Colonial First Wrap, Netwealth, Hub24 and Powerwrap.

*“2 and 20” describes a typical fee structure of two per cent management fee and a 20 per cent success fee ascribed by many alternatives or hedge fund asset managers.

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