Peter Borish has seen the ups and downs in the fund space over his career. Now as chief strategist at Quad Advisors, he is focused on providing key infrastructure services to the managed funds space.
Borish spoke with John Lothian, publisher of John Lothian News, at the Futures Industry Association’s EXPO in Chicago in November about the new venture and what Quad Advisors brings to the managed funds space.
“We look for people with $20 million to $50 million under management,” he said. “But in a post-Dodd-Frank world, they need a lot of help to grow. We become partners, sharing in the revenue to help them grow.”
In doing, so Borish said Quad Advisors’ “hedge fund accelerator” is about growing existing firms rather than simply providing seed money.
“We do allocate capital,” Borish said. “And if they do meet the return in volatility profile, they can also get Quad Securities capital. So our ultimate goal is to build a big multi-strat [fund].”
Borish certainly is well familiar with the fund space as a veteran trader, futures industry executive and asset manager. He was one of the founding partners of Tudor Investment Corporation and is also president, chairman and CEO of Computer Trading Corporation, and director of CharityBuzz.com. The key for managed funds now, he said, is to offload many of the duties and responsibilities to Quad Advisors so firms can simply focus on trading.
“We have the whole plethora – the general counsel, the chief compliance officer, the risk manager, the chief technology officer, the trading technology in terms of execution and pipes,” he said. “So essentially, they’re the CIO. They bring the strategy and we have everything else.”
One of the biggest problems for commodity trading advisors, he said, is that their “messaging has not been very good.” They need to improve their trading strategies and trade marketing, he said.
“They’ve spent a lot of time as an industry indicating what they are not, rather than what they are,” he said. “And that makes it more difficult to market and raise assets. You need to tell people what you are and what you are doing, but you also need to innovate. A lot of CTAs tell me they are trading the same strategy they were using in 1990. I say, “Great, you want my 1990 cell phone?'”
To Borish, CTAs and managed funds managers need to know how to use the tools they have available to improve their trading – especially as transaction costs have fallen and data is cheaper, and storage is less expensive than it was.
“If you want distinguish yourself, you cannot be an index hugger,” he said. “If you want to generate alpha rather than leverage beta, you need to be creative and think outside of the box.”