Marc Lorin joined Wheaton, Ill.-based New Hyde Park Alternative Fund, LLC as its CIO in December 2020, bringing more than 30 years of experience to the firm’s suite of managed account solutions. His experience in alternative investments ranges from investment management and structuring to institutional sales — focusing on global macro hedge funds and managed futures.
The firm sponsors the Galaxy Plus Fund, LLC and Galaxy Plus Hedge Fund, LLC managed account platforms, which deliver an institutional-level managed account service to fund managers and investors in alternative asset classes. New Hyde Park also offers a white-labeled dedicated managed account solution for institutional asset managers.
Lorin was previously director of strategic relationships at Coquest Advisors, and prior to that, was president and co-CIO at Fort Rock Asset Management, where he co-managed the Fort Rock Managed Futures Fund. Lorin was also previously acting head of the Americas Alternative Investment Solutions team at Newedge USA, a division of Société Générale.
Alternative Watch asked Lorin to share a few of his thoughts on New Hyde Park Alternatives investment thesis, and its value proposition to its clients, and on how the current investment environment is impacting the firm’s investment outlook.
AW: What exactly is a managed account platform and why should investors use one?
Lorin: A managed account platform can mean different things to different people. We use that term because every investment on our platform is built around a managed account. That allows us to offer investors transparency, greater liquidity than typical funds, easy customization of terms, enhanced governance, and leverage through notional funding. We have two managed account platform offerings. Our DMAP (Dedicated Managed Account Platform) offering, services large asset owners with their managed account needs. The investor remains the fiduciary of their investment vehicle; we provide all of the operational aspects of the day-to-day operation of the managed account, from onboarding with the FCMs or prime brokers to generating a daily risk report, and everything in between. Our EMAP (External Managed Account Platform) offerings are the Galaxy managed account platforms — Galaxy Plus Hedge for SEC-regulated strategies, Galaxy Plus for CFTC-regulated strategies, and GP Digital for digital assets strategies.
The Galaxy managed account platforms combine the best features of private fund investments with those of managed account investments. The industry refers to the improved features as TLC: transparency, liquidity, and control. Investors receive transparency that they can use, better liquidity than traditional private funds, and control through an added fiduciary layer. In addition, investors may benefit from leverage through notional funding for some of the strategies, while still maintaining limited liability.
AW: What are the investment strategies delivered by New Hyde Park’s suite of managed account solutions?
Lorin: We cover a broad range of alternative strategies, mostly in hedge funds and managed futures strategies but also in private capital. We are even working on the launch of our first digital assets fund. There is no limit to the kinds of investment strategies that can be launched on the platform. Some of the strategies are managed by large, well-established managers while emerging, more nimble managers manage others.
Most of the strategies on our platform are actively managed, with a portfolio that turns over several times per year. They are alternative strategies in the sense that they do not provide market beta, but instead concentrate on generating an alpha that is uncorrelated with the market beta.
AW: Where in an investor’s overall portfolio allocation do New Hyde Park’s suite of managed account solutions fit best?
Lorin: That can vary a lot, but in general, investors come to us with an interest to diversify their portfolio, or that of their clients, away from traditional assets like stocks and bonds. The value of adding low correlation returns to a traditional portfolio may be beneficial. Most of the strategies on our platform not only have low correlation to most risk-on assets, they also may function as risk mitigators in such portfolios.
While the decade following the financial crisis has been easy to navigate—with the benefit of hindsight—with a simple portfolio of stocks and bonds, the last couple of years have been more challenging with the resurgence of inflation and volatility. This past spring, and before that during the height of the COVID-19 crisis, we saw stocks and bonds fall in tandem, unlike in most other times of crisis, when bonds proved to be a powerful risk mitigator for equities. Investors are now searching for other sources of diversification.
Investors can certainly invest in tail-risk hedging strategies, but these usually result in a drag on performance, whereas adding diversification through the addition of uncorrelated returns to a portfolio adds the potential for a positive expected return.
AW: How well positioned or appropriate are New Hyde Park’s commodities solutions given current global economic uncertainty?
Lorin: I authored a short article over a year ago that made the case for investing in commodities but that it wasn’t going to be a one-way up ride. The thesis then was that CapEx investments have been neglected for a long time, constraining supply in the face of a resurging demand post-COVID. The war in Europe is only aggravating this situation, and while most commodity markets have had some very substantial retracements, that thesis is even more true today.
This is why investing in the commodity strategies on our managed account platform makes a lot of sense. These strategies can go long or short any commodity, providing upside capture when commodities rally, while minimizing the impact of retracements, or even providing downside capture then. The more important factor is that volatility in commodity markets should continue to be somewhat elevated, and may provide commodity-focused trading advisors opportunities to generate positive returns that are uncorrelated to traditional assets.
AW: What returns have New Hyde Park’s suite of managed account solutions delivered over the last year, six months, and three months?
Lorin: Returns for most strategies on the platform have been positive and strong during the last year. Year-to-date thru June, some were up in the mid-20’s percent but have given up a portion of those early gains in July, with the summer rally in equities and bonds. Most strategies on our platform are global macro or managed futures strategies, and these have been one of a few bright spots in the investment management industry in H1’2022.
AW: How do fund managers get to be included in New Hyde Park’s Galaxy Plus programs?
Lorin: While we generally respond to investor demand as the main driver to include a fund manager’s strategy on our platform, we also look to include managers that we feel are complementary to the strategies already on our platform.
AW: What was the last book that you read, and how did it grab you?
Lorin: I am re-reading Inside the Black Box by Rishi Narang. I read it years ago. It’s densely packed with information on quant trading, and it taught me a lot back then. Now that my knowledge — and curiosity — has grown, I’m going back to it to check that I didn’t miss anything. Before that, I read a cooking book, Let’s Eat: France! because I like learning about the terroir and the origin of dishes I love.