Chief executive Rod Barker says the company is also setting out to restore trust in the hedge fund industry and talks of the difficulties of building sufficient scale to be taken seriously by institutional investors.
Barker points out the hedge fund industry's reputation was hit by Bernie Madoff’s $18 billion scam and that questionable ‘gating’ practices on certain funds – where people were blocked from withdrawing their money – had deterred many potential investors.
This, he believes, has created an opportunity for more liquid hedge fund products pitched to retail investors.
Rivercrest, which was co-founded by Barker last year, was conceived as the natural successor to Beckwith’s previous venture, Thames River Capital, which was bought by F&C in 2010 in a deal that could be worth up to £170 million.
Beckwith’s company, Pacific Investments, has made its name supporting new fund businesses and past success stories include the now well established Liontrust and boutique asset manager River & Mercantile.
The firm’s first two strategies, the Rivercrest European Equity Alpha and Global Equity funds, were launched last year, and Barker says the firm is looking to broaden the range to six distinct divisions. These will include managed futures, event driven strategies, emerging markets and credit funds.
‘Our business plan was to have one strategy up and running by the first year, we’re ahead of that,’ he said. ‘So, while the focus now is to show the strategies can work and validate our backers, if an opportunity presents itself we would move very quickly.’
Central to Rivercrest’s business plan is the search for talent, and Barker said he is always on the lookout for investment teams who can bring in new strategies.
‘One thing I like is the systematic approach and we are looking for a good team. If you have a quantitative system in place it can bring in returns that are uncorrelated to the markets,’ he said. ‘We take care of all the corporate governance issues so that fund managers are able to concentrate on running their strategies.’
Rivercrest currently has two fund management teams. Ex-M&G managers Giles Worthington (pictured) and Tim Short run the group’s European Equity Alpha fund. Their former fund, the M&G Pan European, posted a 1.1% return over the three years to the end of December 2010, when they left, while the FTSE Europe index was down 1.5%, according to Lipper.
The Cayman-domiciled Global Equity fund is managed by former Lansdowne duo Alastair MacLeod and Peter Simon.
‘Being highly liquid strategies, the funds could scale over time to several billions of dollars. The first $100 million tends to come from friends and family, but once you get past this figure institutions can start taking you more seriously,’ Barker said. ‘I’m talking about fund of funds, multi asset managers, pension funds and insurance companies.’
Despite the kudos of Rivercrest’s famous backer, it has not been easy to get the firm off the ground. ‘Five to 10 years ago you could set up your own shop and get backing fairly easily, but today 80% of investment goes into established brand names that have a lot of assets,’ Barker said.