Stenham Asset Management

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.

Active in investment management for over 25 years, the group is focused exclusively on alternative investment products and providing specialist solutions for institutions, including multi-manager hedge fund portfolios and property funds.

It has total discretionary assets in excess of $5 billion split between hedge fund portfolios and property funds and a client base divided roughly 64% institutional and 36% high net worth clients.

Chief executive Kevin Arenson joined the group in 1997. Since then he has grown assets under management from $70 million to today's $5 billion figure and alongside developing the investment process - he leads the nine-strong investment management team - and building a cohesive and professional team, 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 investable funds 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.

Investment director Lynda Stoelker says it is Stenham's long experience managing and advising multi-manager hedge fund portfolios that has enabled it "to have successfully delivered 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.

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".

"Our starting point is that we don't want to lose money," Stoelker explains. 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 look at things from a very forward-looking qualitative perspective," adds Stoelker.

As an example, she says, in 2002 the group identified leverage building up in the system impacting arbitrage strategies. "Seeing those strategies being dominated by the hedge fund industry we sold out of them."

As it turned out the group was slightly early in doing so but the strategy soon proved prudent. "It was the right decision for the reasons we set out," Stoelker adds.

More recently, in 2007, the group saw similar leverage building in the debt markets and the effect it would have on volatility. "So in 2007 we introduced low volatility holdings to try to protect the portfolios," Stoelker says.

At the same time, the group had to look at equity managers. "This was a harder decision because they were among the best performing managers in the portfolio at the time," Stoelker says. "But we thought that going forward they were short term and as volatility spiked and equity markets fell they would suffer, so we sold them out of the portfolio and replaced them with more market neutral and less momentum driven holdings.

"In this way we are constantly examining the downside risk and looking at ways to protect the portfolios."