Key Takeaways
- • Union Bancaire Privée's hedge fund of funds AUM collapsed from over $50 billion at peak to $19 billion, but has stabilized with redemptions ceasing and new allocations flowing to existing and newly developed products.
- • Larry Morgenthal, former CEO of Ivy Asset Management, was appointed Chief Investment Officer of Alternatives and Head of US Operations in July, tasked with revitalizing the firm's alternative investment platform amid industry-wide restructuring.
- • The broader hedge funds of funds sector remains under structural pressure, with global AUM stuck near $600 billion following 2008 dismal returns and subsequent lacklustre performance, though third-quarter data from Hedge Fund Research showed $120 billion in asset gains—the largest three-month rise since 2007.
- • UBP maintains a strong balance sheet with CHF 6.8 billion in cash and benefits from family ownership under the de Picciotto family, which controls the bank and has maintained its independence over fifty years.
- • Funds of funds are gaining assets despite competitive headwinds, with UCITS-regulated absolute return products emerging as alternative access vehicles for institutional investors seeking hedge fund exposure.
Summary
Union Bancaire Privée stands at a critical inflection point in its restructuring of alternative investment operations following severe asset erosion in its hedge fund of funds business. The firm's peak fund of hedge fund assets under management exceeded $50 billion before contracting sharply to $19 billion—a 62% decline that reflects the sector-wide damage from 2008 and subsequent underperformance. However, recent stabilization signals a potential recovery: redemptions have ceased, and the firm is capturing new allocations to both existing products and newly developed strategies, suggesting institutional appetite for hedge fund exposure is returning.
The appointment of Larry Morgenthal as Chief Investment Officer of Alternatives and Head of US Operations in July represents UBP's decisive move to rebuild credibility and operational capacity. Morgenthal's transition from Ivy Asset Management leadership brings external expertise to a firm facing the common industry challenge of fee compression, product innovation, and operational modernization. Financial executives broadly acknowledge the magnitude of Morgenthal's mandate to revitalize UBP's alternatives platform, underscoring how significant the turnaround effort remains.
Market conditions appear supportive of UBP's recovery timing. Hedge Fund Research data from the third quarter showed $120 billion in net asset gains—the largest quarterly inflow since 2007—signaling renewed institutional confidence. Certain flagship funds, including Brevan Howard Master Fund, have reached capacity and closed to new investors, indicating selective strength in manager performance. Concurrently, funds of funds continue to attract capital despite sector-wide headwinds, and UCITS-regulated absolute return products are gaining traction as alternative vehicles for investors seeking hedge fund-like exposure within a regulated framework.
UBP's balance sheet position remains resilient with CHF 6.8 billion in cash reserves, and the firm benefits from family ownership and fifty-year operational independence under the de Picciotto family's controlling shareholding. Chairman Edgar de Picciotto's recent annual report comments reflect cautious optimism tempered by macroeconomic realism, acknowledging that "the West's Golden Age is drawing to a close" while positioning the firm for sustainable growth in alternative assets. As UBP executes its organizational and product strategy under Morgenthal's leadership, the firm's ability to capture share in the recovering hedge fund allocations market will depend on competitive product design, fee structures, and operational excellence in an increasingly scrutinized institutional investment environment.
The appointment of Larry Morgenthal as Chief Investment Officer of Alternatives and Head of US Operations in July represents UBP's decisive move to rebuild credibility and operational capacity. Morgenthal's transition from Ivy Asset Management leadership brings external expertise to a firm facing the common industry challenge of fee compression, product innovation, and operational modernization. Financial executives broadly acknowledge the magnitude of Morgenthal's mandate to revitalize UBP's alternatives platform, underscoring how significant the turnaround effort remains.
Market conditions appear supportive of UBP's recovery timing. Hedge Fund Research data from the third quarter showed $120 billion in net asset gains—the largest quarterly inflow since 2007—signaling renewed institutional confidence. Certain flagship funds, including Brevan Howard Master Fund, have reached capacity and closed to new investors, indicating selective strength in manager performance. Concurrently, funds of funds continue to attract capital despite sector-wide headwinds, and UCITS-regulated absolute return products are gaining traction as alternative vehicles for investors seeking hedge fund-like exposure within a regulated framework.
UBP's balance sheet position remains resilient with CHF 6.8 billion in cash reserves, and the firm benefits from family ownership and fifty-year operational independence under the de Picciotto family's controlling shareholding. Chairman Edgar de Picciotto's recent annual report comments reflect cautious optimism tempered by macroeconomic realism, acknowledging that "the West's Golden Age is drawing to a close" while positioning the firm for sustainable growth in alternative assets. As UBP executes its organizational and product strategy under Morgenthal's leadership, the firm's ability to capture share in the recovering hedge fund allocations market will depend on competitive product design, fee structures, and operational excellence in an increasingly scrutinized institutional investment environment.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.