Tim Krochuk: Hedge funds team up with traditional asset manager, how to boost performance 300bp (1)

Tim Krochuk is Managing Director and a Portfolio Manger with hedge fund GRT Capital Partners in Boston. GRT Capital and Denver Investments, an $8B asset manager based in Denver, Colorado, have entered a joint venture forming Denver Investments Alternatives. Krochuk also serves as Chief Operating Officer of the new unit.

This alliance raised eyebrows in the industry, as it could be a model to follow for more hedge funds and traditional asset management firms.

The JV makes sense for both as Denver Investments had no alternative products, but GRT can offer a nine-year alternatives track record, multiple audits, a proven back-office, and both long and short capabilities. The newly created firm can offer hedge fund investors the talent, track record, and infrastructure of GRT. GRT will be benefiting from the scope, scale and distribution through this association with a larger, well-established firm. Denver Investments was formed in 1958.

"Unified Alpha Account": Fee netting can instantly boost performance up to 300bp

Denver Investments Alternatives is offering all ten of the independent managers at GRT through a new, unique vehicle called United Alpha Account. Clients can invest in any combination of those strategies through one separately managed account allowing for daily transparency, daily liquidity and netted fees. Netting of fees means that gains are offset against losses, if any, before the application of the performance fee. This means investors will never pay a performance fee when the whole account is not profitable. This was a problem in 2008, when some managed accounts/platforms or fund-of-funds paid a performance fee to positive managers on an account that had negative performance in the aggregate.

The product is favored by consultants and advisers owing to its flexibility because it is easy to move assets between sectors or asset classes as there are no monthly or quarterly lock-in restrictions.

GRT was formed in 2001 by Greg Fraser, Rudy Kluiber and Tim Krochuk, all formerly Boston-based investment managers. The firm runs 11 alternative investment strategies and one mutual fund. GRT's managers have decades of experience, and many boast top Lipper ratings in their investment histories, having worked at major Boston-based institutional asset managers including Fidelity Investments, State Street Research, Wellington, Boston Partners and BlackRock Asset Management.

GRT's strategies include value long-only and long/short, opportunistic long/short, market neutral Europe, three long/short sector focused strategies, closed-end fund long/short, microcap long/short, ETF global tactical asset allocation, and the discussed equity multi-strategy separate account structure called United Alpha.

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• Timothy Krochuk
• GRT Capital
• Denver Investments
• Hedge funds
• managed account