Ex-cop Baha keeps conviction after 2009 sting
LONDON (Reuters) - Losing 50 percent in a year wouldn't normally make you want to invest in a fund.
However, Christian Baha, who quit his job as a policeman patrolling the streets of Vienna in the 1990s to focus on his businesses, argues that higher risks and higher returns are necessary bedfellows in his "black box" hedge fund Superfund.
If you invest, you have to live with the odd freefall.
The fund of the 41 year-old entrepreneur and private investor is completely computer-driven, meaning it is free from the vagaries of human emotion. And returns still look good over the longer term as Baha pursues a powerful conviction that emerging economies will underpin a sustained commodities boom.
Superfund is a managed futures fund, a breed sometimes referred to as CTAs (commodity trading advisers), which, like better-known examples such as Man Group's (EMG.L) AHL or Winton Futures fund, bets on long-running trends in markets.
The equity bear market and moves in the oil price made them the top strategy in 2008. However, CTAs can lose money in see-saw markets as seen in bonds and currencies last year.
Superfund was particularly badly hit, with its most aggressive 'C' share class, which can often gain or lose 20 percent or more in a month, tumbling 51.03 percent.
"2009 was very difficult for Superfund. It was not funny but you have to get through such periods," said Baha, about a third of whose wealth is invested in the 'C' class.
"In 2008 we made 74.18 percent in 'C'. If you do long-term trend following you can have a year like this (2009) every 20 to 30 years," he said in a telephone interview from Austria.
The fund has delivered returns of more than 18 percent so far this year. As of the end of 2009, the three funds which make up the Superfund range had some $1.24 billion in assets.
"THROUGH THE ROOF"
Baha, a serial entrepreneur who set up a software company to analyse financial data at the age of 21 and then discount broker Teletrader at age 25, used some of his early computer programs as a basis for setting up Superfund in 1995.
"It was started on the same principles as today - without human emotions, strict money management and not letting risk exceed the risk parameters," he said.
Despite last year's difficulties, the fund's 'C' share class is still up 360 percent since May 2001 -- the S&P 500 .SPX is down around 5 percent over the same period.
Baha has since expanded the number of markets the fund trades to around 120 and, unusually, he decided right from the start to have a high weighting to commodities.
Both hard and soft commodities are likely to enjoy long-term bull runs, he believes, as demand from consumers such as India and China increases -- trends that CTAs can exploit.
"In the long term commodity prices will go through the roof -- grains, hogs, beef, soya. Farmland is drying out -- there's less and less of it -- and houses and infrastructure are being built everywhere," he said.
"And there's the huge populations in China and India, who will start to eat meat (or consume other commodities). Some of the largest countries in the world are starting to get Western habits."
This also diversifies the fund away from the interest rate, currency and equity futures that many larger CTAs have to play due to their size, missing out on smaller commodity markets.
Baha, who divides his time between Los Angeles, Monaco and Vienna, reflects his personal investment strategy in his fund.
What he has termed the "Baha Portfolio Theory" advocates investing roughly one third in managed futures hedge funds, one third in real estate and one third in precious metals.
As well as houses and apartments, he owns working farms or farmland in Switzerland, Austria, France, Romania, Serbia and Uruguay, producing everything from coconuts to wine for him and also offering a long-term investment.
While he considers real estate too illiquid to offer to clients in a fund, he has taken the unusual step of encouraging clients to buy gold, which he started recommending in 2003, by offering Superfund A and B in gold-denominated share classes.
"Since I invested in physical gold and silver the price has more than tripled. Everyone should have in their savings precious metals because it's something that can protect you very well from inflation or crashes," he said. (Editing by Joel Dimmock)
- Tweet this
- Share this
- Digg this