Copernicus Builds Investment Team, Set To Boost Market Neutral Fund

Mar 17 2006 | 1:00am ET

Quantitative hedge fund shop Copernicus International has spent the last few months building up its investment team, recently adding to its ranks with the hire of Chief Risk Officer Neil Kochen, who previously held the same position for ING, where he was responsible for $160 billion in assets. Copernicus is also ramping up efforts to increase assets in its market neutral product, one of three hedge funds it manages.

“Kochen’s hire into Copernicus is significant, not only because of his most recent accomplishments, but, most importantly, the move reunites a team that started at Aeltus [Investment Management],” said Alan Glatt, president and managing partner, adding that the team has been together in one form or another for the past twelve years, which is unusual in an industry where a team is usually built around one superstar trader.

Additionally, the firm recently hired Peter de Svastich to serve as chief operating officer, chief financial officer and chief compliance officer. Previously, de Svastich was cfo of Decision Capital.

“Today, it’s difficult to grow a hedge fund organically without first having the infrastructure in place. You need to have a fully built out team of seasoned professionals, including a chief risk officer, a chief financial officer and a business organization team, in addition to robust performance, to attract both institutional and ultra high-net-worth funds,” Glatt said.

Meanwhile, the firm, which now totals 11 partners and staff, has decided to focus on its Copernicus International Market Neutral Fund because it believes the investment team can take advantage of market imperfections in the international arena and that this product is also attractive to institutions.

“We like the international market place because we believe we can capture alpha from anomalies that exist there,” said Charles Krusen, a partner at Copernicus.

The market neutral team is headed by Vince Fioramonti, who was ranked as a five-star portfolio manager by Morningstar. He is flanked by Don Townswick, former director of the quantitative unit at Aeltus Investment Management, where he was responsible for $4 billion in assets.

“In a crowded field of market neutral managers, our fund stands out not only because of its outstanding returns given the lower amount of leverage and volatility, 4.6%, but its consistency of returns,” said Glatt. He added that the fund is a good fit for institutional investors because the product is neutral to beta, size and style. “CIMN would be an excellent proxy for a portable alpha strategy, which is currently topical in our industry.”

With the new hires, the firm has made some other changes in preparation for products it plans to unveil later this year. Kevin Means, who has been serving as cio, will focus his efforts on the research and product development at the firm’s subsidiary, Alpha Equity, which Glatt calls a ‘laboratory’ for new products. Means will serve as an exclusive consultant to the firm with the additional responsibility of leading the research and development activities for a new global REIT fund, which is based on an existing U.S. REIT product that is currently being funded with partner money. The new fund is slated to launch in the second half of the year.

The firm has other projects in the works, which Glatt is keeping under tight wraps. However, he isn’t shy when it comes to the firm’s ultimate goal: Building a “world-class” firm.

“We are in a unique position to have three viable international products in the marketplace,” said Glatt, referring to the market neutral product, which has a two-year track record and a 12.9% return for 2005; the Copernicus International Market Plus, which is a 100% net-long product and has more than a four-year track record with an annualized return of 23%; and the firm’s latest venture, a long/short product that was launched last month.    

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