The fund-of-hedge-funds business is at a crossroads, and so is one of its biggest players. Last month $14 billion-in-assets Ivy Asset Management tapped a trio of executives to take the reins from president and CEO Larry Simon and chief investment officer Howard Wohl, the 22-year-old firm’s co-founders.
Sharing the title of president are Simon’s 35-year-old son Sean, previously head of global client development, and Michael Singer, 39, who had been chief administrative officer. Adam Geiger, Ivy’s 45-year-old head of global investments, will succeed Wohl as CIO. For now both founders will remain with the firm as vice chairmen.
The changing of the guard comes as investors are demanding more from funds of funds. Sean Simon, who joined the firm ten years ago when it had just $457 million in assets, knows that the first big rush of institutional money into funds of funds is long gone and that investors are growing weary of paying high fees for mediocre performance. Consequently, big, successful firms like Ivy not only have to prove that they can locate the best managers worldwide but also that they can combine those managers’ portfolios in meaningful -- and profitable -- ways.
“As the fund-of-hedge-funds business continues to mature, it’s no longer good enough to say you offer solely access or capacity or infrastructure,” Sean Simon says. “It’s equally important to find innovative ways to add value for investors who are increasingly sophisticated. And that means finding new ways of structuring and conceptualizing products. Otherwise, funds of funds risk the potential of being commoditized.”
The trio’s new roles at Ivy will also allow them to share responsibility for the firm’s continuing global expansion. Ivy already has a well-established, 20-person London office; it opened a shop in Tokyo last year and is continuing to add staff overseas. “Some of our strongest growth areas -- in percentage terms, not absolute dollars -- are in Europe, the Middle East and Africa,” says Simon. “We’re not just a U.S. firm anymore.”
