Ep. 63 The Long-Short | A hedge fund launch roadmap

Published: 24 May 2023

The Long-Short is a podcast by the Alternative Investment Management Association, focusing on the very latest insights on the alternative investment industry.

Each episode will examine topical areas of interest from across the alternative investment universe with news, views and analysis delivered by AIMA’s global team, as well as a host of industry experts.

Fresh from speaking at AIMA's Next Generation Manager Forum, Elissa von Broembsen-Kluever, Partner & MD at Omni Partners, recalls the lessons and insights she learned as her firm grew, including how to hire the right people, engage with prospective allocators, and keep investors happy.

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Hosts: Drew Nicol, AIMA

Guests: Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP

Interlude: Lorna Barnard, AIMA

Drew Nicol, AIMA  00:05

Hello, and welcome back to The Long-Short. I'm your host, Drew Nicol. I've been kept away from the studio for a little while now, so I am very happy to be back, and I have an excellent guest joining me today. In fact, this is probably going to be one of the easiest episodes we've ever had, because I was sitting in the audience at last week's Next Generation Manager Forum, which I have to say was at the stunning Royal Institution in Mayfair. The whole day was just so packed with great insights from so many different panellists that I've asked one of them to join me in the studio to share some of those points with The Long-Short community. Elissa von Broembsen-Kluever is a Partner & Managing Director, Omni Partners LLP, which is an investment management group focused on private markets. Elissa, you are very welcome to The Long-Short.

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  00:48

Hi, Drew. Thanks for having me, I appreciate it.

Drew Nicol, AIMA  00:52

So, the point of the Next Generation Manager Forum is to bring together a community of startup or emerging investment managers to knowledge share and build networks where they can in what can otherwise be quite an isolating career, at least to begin with. Very often, these are entrepreneurs that will have stepped away from quite large organisations to start up their own fund. They'll be facing all sorts of operational and business challenges for the first time. And the forum allows those people to hear from people who have lifted themselves and can pass down some really valuable wisdom that they gained along the way. So, Elissa, could you just start by telling us a little bit about Omni’s journey over the past decade?

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  01:32

Sure. So, Omni was founded in exactly the way that you referenced a moment ago. What I mean by that is our founder, a gentleman named Steven Clark, he had spent the first nearly 20 years of his career working as a prop trader within the big investment banks. And he came to the conclusion that he was far more entrepreneurial than to be constrained by the shackles of working within the investment banks. So, he made the decision in the early noughties to strike out on his own. And that's when he set up Omni Partners.

I think Omni Partners has a really fascinating backstory. What I mean by that is we started out as a single strategy hedge fund manager. And we did exactly what Steve had done from a trading perspective, in a hedge fund format, for the first several years of our existence. We then experienced something unprecedented, which was the global financial crisis. And that caused us as a collective group to take a bit of a step back and think about what we were doing? How do we create a business that has genuine longevity? One of the challenges, I think, of hedge funds, of course, is that oftentimes I think it feels as though you're only as good as your last trade. And what I mean by that is in a reasonably sort of liquid environment, whereby your investors can make the decision to redeem their money on relatively short notice, you can go from hero nearly to zero, it feels like overnight. But, generally with a pretty short redemption period. And so, back in 2009, we decided to take a real deep look at what we could do to ensure some longevity in the organisation.

We concluded that one of the best ways for us to achieve this was to actually look at how we could reliably and credibly enter private markets. And at that point, we made the decision, having done a lot of research about different areas that offer different return profiles, to enter the private credit space. That was in 2009. Now, the way that we did that was with our own capital. Why? Because we felt it was really important that we demonstrated that we could do what we were setting out to do with our own cash. And after we generated a demonstrated a track record in that space, we then opened our strategy up to external capital, and our progression within private markets grew from there on. So, we made the decision then thereafter to enter private equity. Again, we start with our own capital and demonstrated a track record, and we continue to build on that. And so today, Omni made the decision to actually spin out that hedge fund group last year, so that it could operate on its own, very successfully. You know, we are now wholly private markets focused, which I think is oftentimes a bit of a surprise to people when they think about our history.

Drew Nicol, AIMA  04:27

Excellent. I think it's nice to start with a positive. A great success story that people can hopefully look to emulate themselves if there are emerging managers listening.

I just wanted to touch upon the point where you talk about adding asset classes and a point you made on the day was that this had quite significant implications for your talent management and acquisition of bringing in new people and obviously staffing these new strategies. Could you just speak to that, because I thought that was a really important point you made?

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  05:03

Yeah. So, I think that as an emerging manager you can feel overwhelmed by the requirement to bring in new talent. But what I would say is, as an existing Manager, you can feel that same way. Because, as you decide to expand your focus and look at other strategies, I think it's really tough to make the argument that people who are very qualified in one strategy are necessarily going to be as qualified in executing another strategy. And so, what we've always done is we've looked to bring people in who have specific skill sets that are focused on the strategies that we're looking to launch. Although you're then operating from the front foot in terms of being an established manager, you still feel very much like an emerging manager, because you're building something again, from scratch. You know, I think that is one of the beauties of the alternative investment management space, is that it is the type of industry that offers I think, a lot of opportunities for people who are entrepreneurial.

I guess, coming back to the question you asked, when you are looking to recruit, you need to be mindful about the skill sets that you're looking for, and the opportunities that you can offer people whom you are looking to bring in, especially when you're launching a new strategy, even if you're an established manager, because you are, face it, unproven within that specific strategy.

Drew Nicol, AIMA  06:27

Is there a distinction to draw there between junior and senior hires, in terms of the way you go about finding these people?

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  06:36

Yeah, for us, there has been. I think that we've acknowledged that there's a lot of great talent floating around within the broader financial services sector in London. And it can be really challenging to sort of sift through what I'll refer to as the noise, although we're an established organisation, we don't have a huge team. That means that we do not have a dedicated resource that focuses solely on talent and recruitment management. So, we need to, as the partners of the business, senior members of management, oftentimes run with those recruitment processes. The idea that we could post a job online, and receive, you know, hundreds of CVs for that job, and effectively filter through them, unfortunately, just isn't realistic. So, when we think about recruiting for more junior and mid-level staff, what we've tended to do is gravitate towards the recruitment consultants. And the reason for that is that we've relied on them really to act as that sort of effective first filter, to go out collect to CVs, work their way through the candidates, what they have to offer, how they meet the specifications of what we're looking for, and hopefully do some of the filtering work filter out. The people who aren't the right fit in the first instance.

Now, I'd contrast that, however, with more senior hires. With more senior hires, that is something where we are looking, we generally have a strong view of what we want, what we're looking for. And in those instances, again, we've tended to use trusted recruitment consultants, advisors, in more of a retained search capacity, whereby they're effectively acting as headhunters and going out to identify talent to then give us a very short list that's already highly curated. Again, we find that that saves time. And what we do on the senior hires more so than the junior and mid-level hires is seek wherever we can to triangulate from a personal network perspective,

Drew Nicol, AIMA  08:35

Much like any other industry out there, we have a situation where smaller players will always struggle to compete with their larger peers on a purely compensation model. But you and others made a point that there are many other things that these smaller fund managers can offer when it comes to the working culture. But the point I really wanted to zero in on was this point you made about it's not just having the culture among your existing team. It's about being able to articulate that to prospective hires. Could I ask you to elaborate on that?

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  09:13

Absolutely, I think that when you're working in an environment, such as the environment that we all work in, which is an environment that is an element of high stress, and also high expectation as a result. You oftentimes find that you want to have a very strong, collaborative working relationship ggggg the team. So, I think the cultural fit is extremely important.

What we've discovered during the recruitment process, and also the talent retention process, frankly, is that it's very important to be able to articulate two things in particular. The first is, what exactly are you setting out to do? What are you trying to achieve? And how does the specific role that you are recruiting for fit in that broader picture? That then plays into the second thing that's very important to articulate, which is, what does the growth trajectory or growth dynamic for that individual look like within the organisation that could be specifically related to their role growing within their own division? But equally, it could be related to the way that their role will grow as your strategy grows, or as you diversify your business. I think because we've always come from such an entrepreneurial mindset, we've always wanted to recruit people who have the view that they can be more over time than what they start out as.

What's critical when you're trying to articulate those two points, is number one, having cohesion in terms of view across the team. So, each person who's going to be recruiting or interviewing that individual, sharing that view and being able to articulate it. But really importantly, make sure that you have a spokesperson who can really thoroughly share the vision, and really sell the journey and get people excited about it. Because I think oftentimes, when you're recruiting, you can fall into the trap of thinking, it's all about you learning about the candidate. That's very true and that's very important.

However, what's equally important is making sure that the candidate is learning about you because it does work both ways. And, sometimes it may not be the founder, sometimes it may not be the hiring manager, who's best at articulating the vision and the way that the role fits within the broader organisation. So, just figure out who can do that effectively, and make sure that they're involved in the process. Because if you're going to be, perhaps, only in a position to offer, say, average compensation, that's not going to tilt the scales in your favour. What else can you offer? And really offering a path to development and growth. If you are in an entrepreneurial organisation that does really value high achievers, it is so important, because intellectual stimulation, we've always found is what keeps people around. Absolutely.

Drew Nicol, AIMA  12:05

And so, as we build out the foundations, if we build up a bit of a roadmap here, we've applied some great hiring strategies, and we've got the right people involved. The next natural step there is to talk about capital raising as probably the next or at least equal, most important component here. And this is naturally a hugely challenging area for emerging managers that maybe don't have a recognisable name or a track record to lean upon. And not getting this right is something that can sink a startup fund manager, regardless of how good their investment strategy is. So, what would you say to someone who is preparing for investor calls maybe for the first time and wants to do everything they can to tip the odds in their favour? And specifically, are there any simple mistakes that you see people making all the time?

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  13:06

Yeah, I think the first thing that everyone needs to do is take a step back and be very thoughtful about what is it that they are actually offering. And I think a mistake that managers, regardless of whether they're new managers or long standing managers, can make in the process of trying to attract capital is by trying to be everything to everyone. The reality is, a strategy generally will offer a specific solution, it will seek to fix or address a problem or an issue within an investor's portfolio. And you need to be thoughtful and very honest with yourself about what your solution is seeking to achieve. You need to be able to therefore articulate on that basis, what it is that you are actually trying to do. And, that's what I mean by you can't be everything to everyone because there is no strategy that's the silver bullet for each and every person, because each portfolio has its own challenges, because each investor’s portfolio is constructed in a slightly different way. If you can't articulate that, you will struggle because you will get lost in the noise.

There are a lot of competing demands for investors’ attention and their time. So, you want to ensure that when you have the success of being able to get in front of that investor, you're able to clearly articulate what you're doing. I think then following on from that, what you need to do is you need to then be systematic about how you approach investors. And this involves doing research and understanding who you should be pitching to. It also involves having an effective follow-up once you have had meetings. and really working out where your message is landing. So, what's resonating and what isn't resonating and using that to refine your message over time, because I think that's the other thing to be mindful of is your message will naturally evolve over time because your strategy is likely to evolve over time. But equally, markets change, and portfolio composition broadly will change. So, as I said, always be thoughtful and mindful about whether what you're doing is reflected in what you're saying.

Drew Nicol, AIMA  15:28

So, would it be fair to say that it's important not to be afraid of saying that you're not trying to do everything and have a clearer idea of what you are and what you're not trying to do and, and knowing where your limits are in terms of what you are offering, and maybe embracing those and just saying, this is the specific problem we're trying to solve, and everything else is outside of our remit?

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  15:52

Absolutely, I mean, I think you can always try to leave the door open to further conversations because as I mentioned, things can evolve. But if you want to be effective in terms of the way that you're raising assets, that's what you have to do. And you have to be mindful of the fact that it is very time consuming, it's a very intense process to work with investors and to get allocations. And you want to have as much honest feedback as you can get. You want to therefore, on the back of that feedback, know where you should be expending more resources, and where you shouldn't.

One of the most frustrating things because all managers are time-constrained, I think, is continuing to push on a door that really you should have probably closed, because you're using your time, which could be spent better elsewhere by pushing yourself on something that maybe just has no real viable likelihood of ever being received or achieved in terms of an allocation. You know, it is better to spend your time focused on people who are the right fit for them, people who would isn't the right fit for, because you're trying to be everything to everyone.

Drew Nicol, AIMA  17:07

So, it could come across as style drift. When you're potentially afraid of saying that you don't do something, it could be perceived in a negative way if you're trying to be a jack of all trades.

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  17:19

Yeah. We have to remember the professional allocators, they know what they're looking for, and they also know what works for their portfolio, they know what doesn't work for their portfolio. And on the basis of what the story is you tell them in terms of what your strategy is and what you're trying to achieve, they'll know whether it works. And they're best placed to provide you with that feedback.

Lorna Barnard, AIMA  17:47

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Drew Nicol, AIMA  18:29

So, moving this then, we've got the right IR (investor relations) person in, they've had the call, they've got the ticket, the next stage is then engaging with investors beyond just bringing in the allocation. That is an ongoing dialogue. I think something that came through loud and clear throughout the day, not just in the IR panel, in fact, it is the importance of having that ongoing engagement. But this does seem to be an area where some managers either overlook it or fail to go beyond the absolute bare minimum of a monthly letter or whatever they're just seeing as the standard.

So, as with anything with that's customer facing, ultimately, there is an opportunity here to impress and to stand out. And there are so many tools out there now in the digital comms area. So, could you just speak a little bit about what Omni does here? I imagine this is something that you've had to focus on, as you bring new asset classes in and being able to effectively bring investors along on that journey with you.

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  19:34

Sure. What we've found is that different investors have different approaches. That can be as simple as some investors still wanting to receive there, be it monthly or quarterly communication in the form of an email attachment. Others want to receive it in the form of an embedded link. Others want to receive it on a portal. I think what managers need to do is take a step back before they get into the how’s of delivery, they need to think about what it is that they're actually communicating. We oftentimes have a view that people want to understand you know something about the strategy in a certain way, and maybe we don’t.

We’ve written our letters in one way for however long we've done it, but it does warrant, I think, reconsideration from time to time because as you mentioned, the industry does move on. There has been a lot of innovation on this point more recently, I think the first thing managers need to give some thought to is what do they want to communicate? What should they be communicating? What is the gap, and what is the best compromise to bridge that gap?

So, I am a firm believer in the fact that there is such a thing as sharing too much information, and over-communicating. Because what can happen when you do that is that important information can get lost in the noise. So, you might, as a manager, receive requests from investors for certain things. Some of those things it might make sense to provide. But for others, you might really want to understand the rationale for why the investor is requesting it. It might be that actually you can bring to light the answer to their concern or address their concern, by presenting things in a slightly different way. That would be my first bit of guidance for emerging managers, just because you've received a request, you'll give some thought to what's driving that request, have a conversation, and understand the most effective way to communicate it.

Then the second question comes back to the how’s of how do you communicate this. I think that it's best to take feedback, frankly, from your underlying investors, because there are so many different and new methods of communicating that we can work out what your base, what your audience, what your clients are requiring, what they're requesting, and therefore, what makes sense. I think we've gone to what I would refer to as a middle ground. So, we have used some of these other distribution platforms. And what I mean by distribution platforms is, for example, rather than just sending out a mass email with a random email attachment, we have used sort of bespoke embedded links, and that type of technology to really hopefully streamline the process for underlying investors. We haven't however, gone so far as to start to produce sort of wonderful podcasts like this, or other online content, which I know some other managers have embraced. I think there has been some positive feedback, but not yet a space that we've entered.

Drew Nicol, AIMA  22:42

The other trend I wanted to highlight here was quite an intriguing one, which is the increasing use of separately managed accounts, or SMAs, which panellists noted is, or can be a double-edged sword in that it may allow you to get the allocation that you might not otherwise have got. But it comes with some conditions that make it less sticky. And it can lead to a situation where your commingled fund is neglected. Could you just give us a brief explanation of what SMAs are? And what advice would you give to newer managers that maybe are being pressured by multiple investors to spin these up in order to secure allocation?

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  23:34

Sure, so if I put my hedge fund cap on and look back on the days when we were running hedge funds, rather than running now closed ended fund strategies in the private markets. What single-managed accounts meant to us back in those days, was a bespoke account, basically, that was set up essentially by the client, they provided the capital into that account, and we then traded that account on their behalf. Now, the interesting thing that we always thought about managed accounts was we would constantly during the due diligence process get questions from investors, for example, in the commingled fund, about the liquidity terms of the SMAs. We would always state the contractual liquidity terms of the SMAs, because to be clear in terms of full disclosure, we did run a handful of large SMAs alongside our commingled fund at the time our flagship fund, which was event-driven.

The caveat that we would always add at the end of articulating or sharing the contractual terms is the fact that by their very nature, if the owner of the capital, i.e, the client who set up the SMA, really decides that they don't want you as a manager to continue to have access to run that fund. That can effectively shut you down. So, what I mean by that is they can take the keys away, they can go out to the counterparties to your prime brokers, for example, and relinquish your access to those accounts. So, we would always give, like I said, all the contractual terms of the managed accounts when asked during due diligence sessions. But we would add this extra caveat that people needed to be aware of the fact that SMAS by their very nature, do have enhanced liquidity, it doesn't necessarily mean that the cash is going anywhere. But as a manager, your ability to run that allocation could in fact disappear.

Now, I would contrast that with the private markets, whereby managed accounts are temporarily set up in a very different way. But I think that's probably not really relevant for today's conversation. I think that we've just hit on one of the reasons probably, that the panellists mentioned, that managed accounts can be a double-edged sword. I think, if we go back to first principles, what I think emerging managers need to ask themselves before they engage in discussions about managed accounts, are two questions. The first and most critical is, is your strategy capacity constrained? If the answer to that question is yes, and the smaller the capacity of your strategy is, my advice would be, the more wary you should be of a managed account. Why is that? Because you're giving away capital within the strategy that could be allocated in the commingled fund, and that's limited. So, be thoughtful about whether an SMA makes sense for you if you run a capacity constrained, a capacity-constrained strategy.

The second question that managers need to ask themselves is, at what level, i.e, asset level, allocation level, does a managed account make sense? Depending on the nature of your strategy, and the instruments you're trading, there can be some added complexities to running/administering a managed account. And so, you will need to be mindful as a manager as to how many additional hurdles, how much additional administration there is when you add managed accounts, and therefore what size it makes sense.

So, once you've answered both of those questions, then I think if you still want to engage in the discussion about managed accounts, I can understand entirely why managers would, because some strategies do really seek to be very streamlined from a managed account perspective. CTAs and global macro are two perfect examples that come to mind. If you do want to embark upon managed accounts, my next bit of advice for managers would be to be very thoughtful about the terms on which you offer those managed accounts. Because without a doubt, during your ODD sessions, there will be questions raised about the most favoured nation-status, MFN status, and those will extend into your managed accounts. And if you're being very aggressive, either as it relates to liquidity, or fee terms, or other, you know, transparency metrics, for your managed accounts, visa vie your commingled fund, you are likely to struggle in terms of articulating why those differences exist, and why those differences shouldn't be extended to the commingled fund.

So, once you've dealt with all of that, then what you need to come to a landing on is if you are going to entertain managed accounts, how many does it make sense to have? What does your business model look like? Managed accounts can really be a strong relationship builder. So, this is where the positive comes in because you can get very close to investors when they have a managed account with you, probably closer in some instances than you can with investors who just have an allocation into the commingled fund. But again, even that closeness brings about a bit of a double-edged sword, because there is naturally enhanced transparency, as in when managed account investors are receiving daily reports through the prime brokers or other custodians, and that can raise sort of questions that maybe wouldn't naturally be asked.

The other thing to be mindful of is during periods of stress, it can create an additional layer of oversight that could sometimes be unhelpful. And maybe I can give sort of a concrete anecdote here. So, when I cast my mind back to the initial phases of COVID-19, we still had our event-driven fund operating within Omni Partners and one of the managed account clients that had an allocation to the strategy was concerned about the volatility of the strategy during that first couple of weeks. Naturally, you can understand why they were concerned because of course, there was a lot of uncertainty within the market. But when you're seeing such real-time data, I think that can sometimes cause investors to be, I don't know, what we would in the US refer to as a Monday morning quarterback, so somebody who's looking at what you've done, and started questioning it, a backseat driver, you know, whatever phrase you want to use. And that's not always helpful, because if you, as a manager have strong conviction in what you're doing, you've been trading within all of the expected parameters, risk guidelines, concentration, limits, etc. If you have a view about how you believe you should trade through a particularly volatile period, having that second guest may not be helpful. What can be even more problematic is if you face pressure, or an explicit instruction, from an investor to cut risk, at a certain point, that can have knock-on implications for the performance of that strategy. And ultimately, if we tie that back to compensation, to the ultimate level of compensation that you receive through variable comp, ie performance fees, if you are forced to cut at a point whereby your strategy isn't a drawdown, and not because you feel uncomfortable with the risk in your portfolio, not because you've lost conviction, not because you've reached any limits, but simply because the client has requested it.

Drew Nicol, AIMA  31:30

That is a really important point to take on. But just to flip the coin on that as well. There is the point that even in times of low volatility or low market stress, I should say, there is still the risk that redemptions may come out of the blue or may come regardless of your own performance. And I think maybe there is a misconception that as long as your own performance is going well, although you may have this liquidity obligation or redemption obligation, you'll be fine. And actually, there are all sorts of other reasons why an investor may choose to redeem at a potentially difficult time for you, or at a time when you're pursuing your strategy. And, I think that's something that maybe gets lost in the conversations.

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  32:28

Yeah, and actually, I can share another anecdote from Omni’s history. Now, this was undoubtedly a period of high stress because this was during the global financial crisis. But you may recall, at the beginning of our conversation, I talked a little bit about Omni’s history, and the fact that we did a lot of soul-searching in 2009, about how we create a more robust organisation with longevity. And a lot of that was driven by the fact that during 2008, our flagship strategy, our event-driven strategy, actually returned nigh on 16% in 2008. And, we thought naively at the time, that of course, that would mean we'd engendered ourselves with investors, they would be very happy, and they would be long-standing, reliable, loyal customers, clients of ours.

Unfortunately, into the point that you just raised Drew, in some instances, their hands were tied. And what I mean by that is, they were facing so much stress in other parts of their broader portfolios, that they had a requirement or a need, to basically build capital reserves. And what they did was they unfortunately, oftentimes trimmed in more liquid funds, and in funds that had had increasing performance, because suddenly, because of the positive performance, those funds were deemed to be, quote, unquote, overweight in their portfolio. It's this denominator effect that some of us have read about in the financial sector press. And so, we refer to internally as being used as an ATM during that period. And that was our experience, particularly in the first half of 2009, which was really frustrating.

But as I said, we learned a really valuable lesson. If I look back on it, in a way, sort of slightly thankful that it happened, because that really caused us to give this bigger, broader consideration to how do you create real value in an investment manager. And how do you create longevity there, that's what ultimately, I suppose propelled us into our move towards or into private markets. But it's precisely what you just described, which is despite the fact that we delivered a positive performance, investors were extremely happy with what we did in 2008, and furthermore into 2009. But despite that, through circumstances that were out of our control, and oftentimes out of the control of the individual teams that had allocated to us, we did face redemptions which we were completely gobsmacked by, completely flabbergasted, completely unexpected. But once it started, we recognise that we needed to be prepared for that. We needed to be more thoughtful about what it is that we did and what solutions we provide to clients.

Drew Nicol, AIMA  35:18

So, that is the perfect segue to my last question, because the real-world examples are the perfect way to encapsulate that point. And I hope you might indulge us with a few more specifically, some lessons learned along the way? Maybe some mistakes that you've made that you would like to see others not make. Anything you can share that you wish you had known in years gone by?

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  35:46

Yeah, I think the first thing in terms of lessons learned, and I'm going to end up going back to this same period of the global financial crisis, but there was a point whereby we mentioned we were facing redemptions that were unexpected. And at that point in time, our fund had, I believe, monthly liquidity, but with a 90-day notice. We had investors who submitted redemption requests and told us that they were very desperate for the cash. And so, the decision that we made at the time, although it didn't help our AUM figures, was in some instances to actually repay the cash early. So, go to our board of directors, the fund's board of directors and request that they waive the notice periods. And the reason that we did that was that we recognise that clients were under extreme pressure at the time. The lesson from that for me was, is that there were multiple examples, that having taken that approach, paid off for us in the longer term. So, we had one client who was in our commingled fund at that time, whom we agreed to waive the notice period for. And ultimately, when they regained their footing in late ’09, early ‘10, they came back, and they provided us with a very large managed account allocation. And, when we were discussing with them, you know why they felt comfortable doing that, at that time, they talked a lot about the fact that we demonstrated the type of character that we had as an organisation, in the way that we conducted ourselves. So, I think my first bit of advice to managers would be, every decision that you make, does have the potential to have a knock-on impact on your business in the future. So, be thoughtful about what it is that you're doing at all times, because it may seem like something that's not that important, or not that meaningful at the time, but it can go on to really impact.

I think that can also work in the opposite way. Decisions that you might make shooting from the hip, that you think aren't that big a deal, perhaps can come back to us, but also sort of bite you in the future. I can't think of an example off the top of my head for us right now. But I'm sure there is one that's just escaping me at the moment.

I think this is the second thing that I would then highlight in terms of lessons learned, I talked earlier about thinking about during the recruitment process, who the right spokesperson is, think about that throughout all of the parts of your business. Who should be the person responsible for having certain conversations and certain relationships. It may not always be the obvious fit. So, think about that. And make sure that you're utilising those people in the right way. Because, our business is very relationship-driven, not only on the client side but equally on the service provider side, on the broader network side. So, always be thoughtful about how can you be using your internal talent, and your internal resources as effectively as possible to communicate to the right third parties.

I think then, I would also highlight the fact that the way to keep people, which I've already mentioned, so I sound perhaps like a bit of a broken record, is to keep jobs engaging, keep people in opportunities where they're constantly learning. If your staff can learn something new every day, that's a great place to be. I think that's a great way to try to reduce turnover as much as possible. Also, create a very loyal employee base. I think stability is something that is critical when you are an emerging and also a long-standing manager to be able to point to some element of stability in your business. This is very critical because this is a reasonably crowded marketplace. So, even if you're not the biggest manager with the best-known name, there are other small things that you can do to try to shift the odds, the odds of success in your favour.

I think the last point that I'll raise is really just around staff because, ultimately, we're providing a service, and we're a people business, this is very much like intellectual capital driven. And, you need to have the right people. You want to make sure that you don't have everyone just a carbon copy cookie cutter image of one another. So, think about that, as you're constructing teams, make sure that people bring different strengths to the team, and make sure there's challenges within the organisation. So, when I think about, some of the more challenging periods for Omni, I think it's probably been when we've not challenged ourselves enough, when we've not asked ourselves the hard questions that we should have asked ourselves, where things have tended to be more difficult, and probably introduced an extra level of stress to the business that is just unnecessary.

Drew Nicol, AIMA  41:11

So, in summary, we could say, don't neglect the small things. Remember, you're in a relationship business, think long term, especially when it comes to those relationships with investors, keep staff motivated and engaged. Partly that speaks to the culture point we spoke about earlier, encourage diversity of thoughts, and don't shy away from problems when they do inevitably arise.

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  41:37

Yes, you've got it. You did it, you summarised it much more eloquently than me.

Drew Nicol, AIMA  41:43

So just on a personal level, then very finally, is there any advice that you would give to someone who is either just starting out on this journey? We painted a really beautiful arc here in this conversation about some of the main chapters that will likely come up in part of this story, but is there anything that you would just like to say to someone if they came to you and said, they were thinking of taking on this career path?

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  42:10

Yeah, I think I'll start maybe with the negatives, which is, it's hard setting up. Full disclosure, I wasn't at Omni in 2004, when it was set up, I only joined the firm a handful of years later, at the beginning of 2009. But even then, having been an operation for five years, it was still challenging. And even today, still, nearly 20 years on, I would say it's challenging. So, the business isn't an easy business. I think in a way, the one thing I would say is the highs get higher, and the lows get lower, it feels, the longer you do it. But I do think it's well worth it, because there is a huge amount of opportunity, again, I'll reiterate this idea of intellectual stimulation, there is a huge opportunity to learn, and to be faced with interesting situations, interesting challenges on a daily basis. So, I would say, if you can make it through the early stages, it is well worth it. The risk is worth the reward. But setting up is a risky endeavor.

It does take a lot of, I think perseverance, it also, let's be honest, takes a lot of capital. So, you need to make sure you've got the right funding. I think that was something that was mentioned on one of the panels at your (AIMA’s) event was, don't be naive to the fact that this will cost not only from a time perspective, but also from a monetary perspective. But like I said, if done well, I think that you can set up a really interesting sort of organisation, you can be very entrepreneurial, and you can be constantly learning, which I mean, who doesn't want to do that every day.

Drew Nicol, AIMA  43:52

I think that's the perfect place to end. Listen, this has been a really excellent conversation. I was very keen to get you on (the podcast) just to try and distill some of the many points that were raised on the day for The Long-Short listeners. I think we've done that excellently. Thank you so much for joining us today. We'll have to get you on again because there's clearly much more to talk about.

Elissa von Broembsen-Kluever, Partner & Managing Director, Omni Partners LLP  44:17

Well, thanks for having me, Drew. Really appreciate it. I really enjoyed it. Thanks.

Drew Nicol, AIMA  44:20

Those interested in learning more about next year's Next Generation Manager Forum or any of the many other ways that AIMA’s community of emerging managers collaborate throughout the year should contact our global head of membership Fiona Treble or their AIMA contact. Thanks for listening.

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