Max Gottschalk, Co-Founder and Head of Asia Pacific, Gottex Fund Management
Can you tell us a bit about Gottex?
Gottex Fund Management is a global alternative asset management and advisory firm. Founded in 1992, Gottex has US$8.9 billion in total fee-earning assets as at 30 June 2011. We offer a variety of investment products and related services to institutional investors across the world. We employ 109 professionals, including over 30 investment professionals, in six offices located across three continents. This allows us to combine in-depth local knowledge of financial markets and investors with the strength of a global presence and infrastructure.
What is your own background?
I joined Gottex in 1998 and co-founded its fund of hedge fund business. I am a member of Gottex’s management and investment committee and currently run Gottex’s Asia business. Prior to Gottex, I worked at Bear Stearns & Co in New York where I was responsible for looking after hedge funds on the fixed income derivatives desk. I have a business degree from the University of Virginia and was part of the junior Swiss ski team having been brought up in Switzerland.
Describe your investment strategy and why it differs from what other fund managers are doing.
Our products are principally focused on relative value and arbitrage strategies leveraging our deep bench of investment professionals who have come from various trading and prop desks on Wall Street. We have designed products that exhibit low correlations with traditional markets which meet the need of our institutional clients that are looking to diversify from equities and bonds. We differ in that we don’t invest in managers that take outright directional bets and therefore limit ourselves to a smaller part of the hedge fund universe.
How has Gottex’s approach to risk management changed in recent times?
We always had a strong emphasis on risk management coming from a trading background. We have been developing our own tools for risk management for over a decade now and believe that we have a very unique approach to looking at risk in our industry which enable us to monitor most of our hedge fund investments on a real-time basis and to be proactive in our portfolio construction/management. We always look at ways to improve our risk system and have made a number of improvements since the crisis. A key change to our investment approach since the crisis has been the increased use of hedge fund managed accounts, which provides us with far greater control and transparency over our investments.
Do you see changes in regulation as a threat or an opportunity?
Regulations increases the barriers to entry and are aimed at protecting investors and markets. So although it may require adjustments and additional disclosure and expenditures, I believe that regulation will be good for our industry medium to long term as it should give investors greater comfort in investing in hedge funds.
Fundraising in Asia: as Asian investors increase their hedge fund allocations, do you think Asian managers will start to benefit more or will big global fund managers get most of the assets?
Asian’s investors as a whole are still under allocated to alternatives compared to their US and European counterparts which offers some interesting fund raising opportunities for global managers like Gottex. We also see an increased level of interest by foreign investors looking for Asia-based investments. I believe that a large portion of assets raised out of Asia will be allocated to global products.
Why did you recently choose to relocate to Hong Kong?
The world’s economic engine is in Asia and I believe it offers firms like Gottex great opportunities to expand as the asset management industry grows and become more mature. Hong Kong is strategically well positioned, business friendly and offers easy access to the region.
What would you have done if you hadn’t been working in a fund management company?
It’s a difficult question as I have been passionate about the investment management industry since I was a kid. I have always been intrigued by the way the world works and economics. I am also an avid sportsman and music lover and could have very easily pursued careers there, but finance was my vocation.