IPE Institutional Investment: A lot of people say that 2009 was the year of market beta and that 2010 will be the year of the alpha manager. Would you agree?
Straatman: 2009 was also a year of great alpha opportunities as our funds show. We expect more divergence in 2010, but divergence brings opportunities for active management to generate alpha.

IPE Institutional Investment: Passive managers got quite some inflows over the past years. Was this mainly because of the poor performance of active managers, or do you see any further reasons behind the trend?
Straatman: In the case of poor performance, you almost always see outflow of active to passive. Active pay offs are regime dependent. Thus, Beta is certainly not always the solution. I am convinced that in 2010 ‘Alpha houses’ will do better than ‘Beta houses’.  

IPE Institutional Investment: Why have the last few years been so difficult for active managers?
Straatman: The regime for active has been difficult (low dispersion/high correlation). But even in difficult times there is a divergence between investment houses. We have shown 68% above benchmark over the last 5 years of our AuM and 77% over year to date.  In general this discussion is more about trust, confidence and more transparency towards clients.

IPE Institutional Investment: The month after the Lehman collapse was probably the most difficult for active managers. Everything was being sold no matter what the underlying quality was…
Straatman: Indeed, but we stayed true to our convictions. Active management is all about strong view and conviction. In 2009 this has paid off.

IPE Institutional Investment: To return to my first question – are you seeing a clear trend back towards active management?
Straatman: Yes. The need for alpha is bigger than ever. The regime for alpha is positive; skill will ultimately pay off.

IPE Institutional Investment:  What are – in your opinion – the most important attributes for being a “good” active manager?
Straatman: I would mention three important facts:
* a skill base investment approach and organization (multi boutique)
* a dynamic risk approach
* superior execution
We embarked on a reorganization to improve on exactly these things. We introduced the multi boutique structure, centralize Corporate Analytics, Support & Dealing and improved Risk Function by introducing Strategy Diagnostics.

IPE Institutional Investment: How do you see the role of risk management within the process of an active manager?
Straatman: We manage risk at three levels:
* the traditional risk models within strategies, such as tracking error restriction and regionl exposure
* more dynamic risk models within strategies based on skills, such as draw down, regime risk, event rist, opportunistic risk and unintended risk
* an overlay risk control called Strategy Diagnostics constantly monitoring risk of all boutiques.
The future of risk management is that it has to be more forward looking, more adaptive and more multi asset than has been the case in the past, as most existing risk systems do not capture these characteristics we built our own proprietary diagnostics infrastructure.

IPE Institutional Investment: Investors are looking (again) more and more for Multi-Strategy as part of diversifying risk and getting better returns. What is your perception?
Straatman: Multi assets is always a good way of diversifying. Diversification mitigates total risk. But it also increases complexity and demands more from your monitoring and risk management capabilities.

IPE Institutional Investment: Final question – active vs. passive in five years: What is your view?
Straatman: I strongly believe in active management. But I also believe that the regime for pay off will be favorably the coming years. It has paid off the last 5 years (68% AuM outperforming benchmarks). We see a lot of divergence which offers opportunities for active managers. While dispersion and correlation are developing favorably panic is not expected.  In other words the conditions for active management are much better while the opportunities for beta driven strategies are only moderate. Key message is that managers have to be more client centric and pay more attentions to client needs and wishes.

IPE Institutional Investment: Many thanks for your insights.