The New York-based Lyford Group International, with $82 million in assets under management, is rolling out its fourth investment vehicle in the form of a managed account on the HFR Asset Management platform.
Lyford manages a discretionary macro strategy with an emphasis on tactical short-term trading. This one strategy is currently employed across one fund and two managed accounts and, according to Lyford President and COO Daniel Solomon, may be part of the attraction for HFR:
“There are not that many discretionary managers on managed account platforms,” Solomon told FINalternatives, “Many managed account platforms have CTAs and quantitative strategies, but few discretionary macro managers; so one benefit that we can bring to investors is style diversification.”
A second benefit, he says, is “true diversification.” In its eight-and-a-half year history, Lyford has shown “no meaningful correlation to any hedge fund index or conventional beta—stocks or rates or commodities.”
And thirdly, says Solomon, Lyford offers “true alpha.”
“Since inception, we have generated substantial alpha against both conventional benchmarks, such as equities, and also against hedge fund macro indices.”
Solomon says one of Lyford’s two existing managed accounts is ERISA money. “Obviously, we don’t have the highest AUM, but we worked very hard to put in place a real, institutional-calibre business process, which we were pleased that this advisor to ERISA money found appealing.”
Through HFR, Lyford will have an opportunity to reach a broader spectrum of potential investors—including those who find the Lyford strategy appealing but for whom the $10 million minimum for a standalone managed account is a bit stiff.
“If HFR has a number of clients each interested in investing $1 million or $2 million with Lyford and it aggregates them,” says Solomon, “and comes to Lyford with $15 million, then it’s mutually beneficial for the investor and for the manager.”
The HFR managed account will also complement Lyford’s other managed account, which is for a London-based managed account platform.
HFR has multi-billion managers on the platform, but “in this environment, investors are thirsty not only for managers who are delivering an uncorrelated return stream but whose businesses are sound and not too big,” says Solomon.
Lyford is currently assembling investments from both Lyford and HFR investors for the new vehicle, says Solomon to achieve “minimum initial takeoff velocity.” The account is expected to fund shortly and Solomon wants potential investors to know their interest is appreciated:
“We would like them to feel great about being the first investors in… For initial investors we are considering offering them a fee break as a concrete thank you for getting the account up and running.”