Winner: Best high net worth/private client fund of hedge funds provider. Highly commended: best overall group and best investor relations team

2009
Best Overall Group: Winner

Founded in 1901 the Stenham Group is 51% owned by the Peregrine Group and 49% by Stenham, including directors and management.

Edwin Wulfsohn, now the group's deputy chairman, joined Stenham in 1970 as its chairman and chief executive. He expanded its activities into a multi-family office offering trust services, wealth management and corporate finance/private equity services to exploit the deal flow from its diversified activities and markets.

Stenham Asset Management has been active in fund management for over 20 years. It is focused exclusively on alternative investment products and providing specialist solutions for investors, including multi-manager hedge fund portfolios and property funds.

Its stable of investment products include solutions for pension funds, charities, family offices and high net worth individuals (HNWIs) and includes discretionary portfolios and funds of hedge funds (FoHFs). Its client base is divided roughly 64% institutional and 36% high net worth clients.

Clients for the asset manager are mainly located in the UK and Channel Islands, Europe, Southern Africa, Latin America and Japan.

Chief executive and chief investment officer of Stenham Advisors, Kevin Arenson, joined the group in 1997. Since then he has grown assets under management from $70 million to $3.1 billion (at July 2010).

"It’s not just one single thing we do that helps us stand out but a process that we have developed over a period of years. It’s partly about stability – members of our team have been here for years working together. You need to have a stable team that works well together and believes in what it is doing to create excellence.

Arenson has launched the group's multi-strategy and global macro funds and introduced the equity and commodity range of funds.

The group has 181 staff in seven countries and an experienced and stable senior management team, the key members of which have been at Stenham for over 10 years and who have significant amounts of their own capital managed by Stenham.

A measure of success for the group is its loyal client base of many years' standing - a testament it says, to the successful realisation of its investment objectives, as outlined by Arenson, of capital preservation and steady returns.

“A key issue is avoiding mistakes. Our extreme focus on downside risk has helped us to avoid blow-ups,” notes Arenson.

“Our investment process focuses on protecting the downside which forms an important part of the culture of the firm. Our roots are in managing wealth of private families. We started off as a family office and grew into also managing assets for pension funds,” he adds. "HNWIs are much more concerned about security and wealth preservation rather than just making money. We take care of the downside and the upside takes care of itself.”

Stenham's long experience managing and advising multi-manager hedge fund portfolios has enabled it to deliver consistent absolute returns through periods of exceptional market volatility.

That same experience and longevity in the market has given the group a standing that allows it to access the best managers globally and to negotiate preferential allocations despite scarce capacity.

“We take care of our clients. We have a responsibility to them, to ensure they are kept up to date in what’s going on and how we are investing their money. In both good times and bad, you need to talk. We don’t like to let details of our investments out into the general market place but we give full transparency to all the clients who request it," Arenson says.

Arenson places capital preservation at the heart of Stenham's ethos, and says this has consistently been achieved over the last twenty years through "sound and cautious investment principles".

The starting point for Stenham is the fact it does not want to lose money for its clients. From there the group assesses how to protect capital and how to make returns from an asset allocation point of view.

Analysts feed into weekly meetings which the whole research team participates in, and from which managers can assess how risks and imbalances may be building up from a macro perspective. From that the group makes its decision on how that may impact different hedge fund strategies.

“We have a separate operational due diligence team – that’s become the standard since 2008 but it’s something we have had in place for many years,” explains Arenson. “We were early in putting in place this separate function. Our operational due diligence personnel will identify particular risks, such as leverage, a lack of transparency or investing in instruments that aren’t liquid enough for us.”

“They have always had a complete veto on any investment – if they weren’t happy with the counterparties such as auditors or even lawyers, or if they couldn’t see independent valuations being produced they can exercise that veto. When it came to someone like Madoff – well, it didn’t really make sense how someone employing such a simple strategy could beat the market year after year. If we don’t understand the process, it’s not for us,” Arenson concludes.

Patrick Bruen, Louise Kruger South African Diamond Broker (left) with Kevin Arenson, Stenham Asset Management