Wealth Management: Blog - Meet the Manager: Abbey Capital

Sophie Kilvert - Client Adviser

You will have often heard us describe how we structure our portfolios based on a balance of Return Assets and Diversifying Assets. These diversifiers play a key role in protecting against market volatility, which has been integral in sustaining our portfolio performance this past year.

In this podcast episode, Sophie Kilvert speaks with Tony Gannon, founder and Chief Investment Officer of Abbey Capital; one such diversifier and specialist of multi-manager Commodity Trading Advisor (CTA) strategies. In this discussion, we take a closer look at Abbey Capital’s approach to managed futures and thereby how they provide diversification in your portfolio.

In 2000, Tony founded Abbey Capital. While their most common strategy is trend following, their multi-manager approach allows them to combine a range of strategies in their portfolio. Their early recognition of the growing capacity of technology and systematic controls to enable effective remote working, versus the traditional model of in-house trading houses, was also a key differentiator, enabling Abbey Capital to employ CTAs with different styles from all around the world. A distinguishing characteristic of managed futures strategies is that they have no directional bias, so can gain uncorrelated returns in any asset class. The bulk of the returns generated by the underlying managers in Abbey Capital’s portfolio will be during strong, prolonged moves in markets, whether these be up or down, in a bear or bull market.

Because of their multi-manager approach, Tony’s role is to select and build relationships with the managers they work with. Tony outlines his approach to researching and choosing managers, emphasising a people-centric focus. He looks for managers who are smart, innovative and disciplined, and he and his team drill down to every element of the business in question, performing multiple independent due diligence reports and taking a broad yet deep view beyond just returns. This approach is much like our own at Rothschild & Co; leaving no stone unturned when deciding which businesses we invest in and which third-party fund managers we partner with.

In the current low-level bond yield climate, Tony discusses how managed futures may be a key alternative strategy for gaining uncorrelated returns. He recommends analysing past correlation to consider whether this will recur or change in the future. The nature of trend followers, provided there are no dramatic flips, allows a degree of certainty during prolonged market moves. In general, the bi-directionality and broad diversification across multiple asset classes means that managed futures has the potential to provide diversifying returns in our portfolios in many market conditions.

This document is produced by Rothschild & Co for information purposes only.  This document does not constitute a personal recommendation or an offer or invitation to buy or sell securities or any other banking or investment product. Nothing in this document constitutes advice of any sort and no responsibility is accepted in relation to the content accuracy or any reliance on the information provided.

The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.  Past performance should not be taken as a guide to future performance.  This content should only be used or reproduced with the express written permission of Rothschild & Co.