Chairman Anric Blatt and CEO Lauralouise Duffy of Global Fund Exchange talk about the challenges of a multi-manager fund of funds focusing on commodities, energy, water and agriculture strategies.
Global Fund Exchange, a fund of funds with expertise in the commodity, agriculture and energy sectors, has a different way of constructing portfolios as well as viewing the markets.
“We look at energy as what we call the bridge period. The bridge period represents traditional energy becoming cleaner and more energy efficient while clean energy becomes more cost efficient and more easily accessible,” explained CEO and principal Lauralouise Duffy.
“If you look at energy over the last 20 years, 1990-2010, you’ll find that 83% of all new energy demand was met by fossil fuels. However, going forward from 2010 to 2030 we are anticipating a 40% increase in energy demand across the globe. Of that energy we predict that 64% will be from traditional energy sources,” she added.
According to Duffy, Global Fund Exchange looks to find the “most efficient, cost-effective and easily accessible energy there is out there”. Duffy and chairman and principal Anric Blatt agree that both traditional and new energy sources are “intrinsically aligned”. If investors look at these two in isolation, they “will see a lot more volatility”.
“We have a theme: people, climate, profit. We need to meet the needs of the people. We need to be respectful of the planet but nothing happens unless profitability is built into it. Our investors want to be in this space but when you try to play it in isolation, through the water sector or through the clean energy or natural resources sector, you have a lot of volatility,” explained Duffy.
“What we have created is a way to invest in what we call the future of energy,” she continued, “a way to put your toe in the water without risking losing your whole leg. We’ve found that people are very excited to have the opportunity to play emerging energy – the clean energy, agricultural and water sectors – and simultaneous playing the entire energy revolution. We do this by managing each portfolio as a separate portfolio that is geographically, sub-sector and asset-class diverse.”
Blatt gives an example. “We are really looking for the tried and tested energy analysts who truly understand the infrastructure, yields on that infrastructure, financing customers and so on.” He believes in the financial sense of energy projects, where it is a good investment and not because “we want to be clean and green”.
“We have very deep research into the big macro factors shaping the world: what does the next 50 years look like, what are the big picture themes? We go and find the best niche experts in that particular geography or sector and then start due diligence. That takes a very long time. We want to be ready. When we want deploy money into carbon or clean energy in , say, Northern Europe, we know who is the best manager on the spot,” said Blatt.
Duffy has been a principal of Global Fund Exchange since 2006. She has a 21-year career in finance and hedge funds across a range of asset classes in emerging and developed markets.
Blatt has been with the Global Fund Exchange group since its founding in 2005. His principal areas of focus include strategy allocation, portfolio management, manager research, due diligence and new product development and structuring.
Global Fund Exchange specialises in tailor-made multi-manager portfolios for a broad range of clients including pension funds, sovereign wealth funds and other institutions in global tactical asset allocation, alternative investments, energy, commodity and multi-strategies.
Originally, Global Fund Exchange was established in Hong Kong and Switzerland to provide fund establishment, seeding and legal infrastructure, independent risk monitoring and compliance for emerging managers. The group relocated to the US in 2007 where it carries out fund management including portfolio construction, manager selection, due diligence, macro overlay, asset allocation and portfolio management. The group companies provide independent risk monitoring and ongoing due diligence to institutional clients across all asset classes and managers in its portfolios.