|
Gabriele Quargnali Matthias Knab, Opalesque for New Managers: Hedge funds are back in demand, supported by a more favorable environment for active management: normalised rates, higher stock-bond correlations, wider dispersion, elevated volatility and a market in which resilient headline indices still mask significant performance gaps beneath the surface. For Gabriele Quargnali, Investment Manager Hedge Funds at Zurich-based AQUIS Capital, those conditions make disciplined fund selection and portfolio construction essential, with liquidity remaining one of the key constraints in how that opportunity is implemented.
"The hedge fund industry is more liquid compared to other alternative asset classes, but there is still a trend going towards less liquid structures. We also see more funds introducing gates, which are inconsistent with the liquidity discipline we want in our hedge funds portfolios" Quargnali told me when I visited the firm for a hedge fund roundtable in their Zurich office. The AltAlpha SICAV - Abacorum Fund, the multi-strategy fund of hedge funds managed by AQUIS Capital, offers its own investors monthly liquidity, "which resonates well with investors in the current environment."
That combination - capital preservation first, liquidity treated as a hard constraint rather than an afterthought - runs through the way AQUIS builds its portfolio. It is also the practical side of a broader argument the firm set out in its recent paper Hedge Funds Are Back, Why Now?, published on 27 August 2026.
A specialist boutique with two businesses
AQUIS Capital is a FINMA-authorised asset management boutique active in two business lines. The first is Emerging Asia, where the firm manages the Lumen Vietnam Fund, a long-only fund investing in listed Vietnamese equities, supported by a team of more than fifteen people in Ho Chi Minh City. The second is hedge funds, where AQUIS has been active as a company for five years, while its principals have worked in the industry for two decades. Chief executive Son Nguyen co-founded Zurich fund of hedge funds manager Ayaltis in 2008 and led it until 2019. Nine full-time staff in Zurich cover the hedge fund investment team, support for the Vietnam fund, IT and operations, compliance and marketing.
On the hedge fund side, Quargnali describes three pillars: the discretionary solutions offered through the Abacorum Fund, hedge funds advisory services for institutional investors, and complementary services around the monitoring and structuring of hedge fund products.
Under the radar, inside an institutional process
"We try to focus on under-the-radar and niche boutiques in terms of managers within the framework of a capital preservation mandate. That is really the philosophy," he said. What differentiates the firm, in his view, is the process: structured and institutional, with segregation of duties between the investment and operations teams, CAIA expertise on the investment side (Quargnali and Nguyen are charterholders), and the full institutional set-up that comes with FINMA regulation.
"The aim of the Abacorum Fund is really to provide investors with a best-in-class selection in a diversified portfolio, designed to protect capital in stressed markets and offer stable compounding over multiple cycles," he said. The fund targets 7% to 9% a year over a three- to five-year horizon, with a low to medium volatility profile and low correlation to traditional asset classes.
Selection runs through several layers, beginning with quantitative filtering "that helps us navigate the huge number of hedge funds that are out there." That screen applies hard parameters. Among them, managers need a track record of more than five years. Annualized returns, both since inception and over the last three years, must be above 8%, "to show that the manager has been able to deliver results consistent with the fund's target mandate." Downside behaviour is examined through measures such as the Sortino ratio and maximum drawdown. The minimum size hurdle is USD 100 million, although the portfolio is generally invested in managers with significantly larger asset bases: according to the August factsheet, more than half of the portfolio is allocated to funds managing over USD 1 billion.
A preference for monthly or better redemption terms is the default. Quarterly redemption terms are accepted only for a limited part of the portfolio, where the underlying instruments require it and the strategy offers double-digit annualized returns in compensation.
Liquidity as a design feature
The result shows up in the portfolio's liquidity profile. The August factsheet: managers offering daily liquidity account for 14.2% of the portfolio and those offering weekly terms for 9.0%. Managers offering monthly redemption terms account for a further 55.4%, while 6.6% is held in cash and money market funds. In total, the large majority of the portfolio is allocated to managers offering monthly or better redemption terms. The remaining 14.9% is invested with managers offering quarterly redemption terms, with no gates, Quargnali stressed.
The AQUIS paper argues that this is exactly where the allocator debate has moved. Slower distributions, longer holding periods and large volumes of committed but uncalled capital in private markets have reduced investors' ability to rebalance or redeploy, turning the redemption terms of hedge funds into a portfolio advantage in their own right. Quargnali sees the effect on the demand side: the hedge fund industry, he said, is benefiting not only from attractive returns in recent years but also from concerns about liquidity in other asset classes.
Strategy agnostic, bottom-up
Abacorum targets 15 to 25 underlying funds. It held around 20 at the time of the interview and started in July with 22 positions after changes made in June. The largest holding is close to 6%, against a maximum position weight of 7%, within a core-satellite structure.
"We remain strategy agnostic. We try not to have a strong top-down view, but we really start with the managers - with the risk-return profile of the underlying strategy," Quargnali said. The team looks for managers with a repeatable process whose return stream is uncorrelated to the other strategies in the portfolio and checks those correlations across multiple market regimes. The emphasis on managers with asymmetric return profiles is meant to carry through to the portfolio level: "The overall performance of the portfolio will reflect these kinds of features, with higher upside capture and strong downside protection."
Diversification is managed along several dimensions. Geographically, the portfolio spans the US, Europe and Asia, and AQUIS increased its geographic diversification slightly at the start of 2026. The August factsheet shows 47.1% in global mandates, 22.8% in North America, 15.6% in Asia, 4.5% in Europe and 3.4% in MENA. By capacity, 56.6% is invested in open funds, 24.1% in soft-closed and 12.7% in hard-closed funds, reflecting the focus on capacity-constrained managers. By strategy, Equity Long/Short is the largest allocation at 36.6%, followed by Multi-Strategy (17.1%), Event Driven (15.3%), Relative Value (10.1%), Macro (9.6%) and CTA (4.7%).
The numbers
Abacorum's USD Class A has compounded 41.91% since its launch in July 2018, an annualised 4.38% with volatility of 3.73%. Its maximum drawdown is -2.62%, over a drawdown period of four months, and the fund has finished every full calendar year since launch in positive territory, including 2022, when it returned 6.20%. Its correlation to the Bloomberg Global Aggregate bond index is -0.07 and to a global 60/40 portfolio 0.31, with a beta of 0.10. Over the same period the 60/40 benchmark delivered a higher annualized return of 7.96%, but with volatility of 11.52% and a maximum drawdown of -23.06%, and a near-identical Sharpe ratio (0.45 versus 0.44 for the fund).
2026 is shaping up as one of the fund's stronger years. After an estimated 1.00% gain as of mid-August, following -0.90% in July, Abacorum is up 4.81% year to date - already ahead of its full-year returns for 2025 (4.46%), 2024 (4.55%) and 2023 (2.22%). In August, Equity Long/Short was again the main contributor at 0.63% gross, with Event Driven, Multi-Strategy, CTA and Relative Value also positive and Macro slightly negative.
Why now - and why through a fund of funds
The AQUIS paper "Hedge funds are back, why now?" makes a two-part case. The first part is the environment: normalized interest rates, high stock-bond correlations, wide dispersion and elevated volatility, conditions that were largely absent through the 2010s and are now present at the same time across equities, credit, rates, currencies and commodities. Citing Barclays' Strategic Consulting Team, the paper notes that hedge funds returned an average 11.2% in 2025 with every strategy contributing positively, that industry assets have passed roughly USD 5 trillion, and that inflows are at their strongest in almost two decades - a sharp reversal from 2016-2023, when net outflows averaged around USD 30 billion a year.
The second part is implementation. Performance dispersion between managers running the same strategy is far wider than in traditional asset classes, which puts manager selection and portfolio construction at the center of outcomes. At the same time, the industry is concentrating: citing With Intelligence, the paper says around 88% of global hedge fund assets sit with the 579 firms managing more than USD 1 billion each. Yet many attractive strategies remain specialized and capacity-constrained, and the most consistent managers often reopen only to existing relationships, which is where pooled capital and a long record as a reliable capital partner matter.
The paper also flags crowding as one of the most underestimated risks in the industry, with the median hedge fund's concentration in its top ten long positions at a record high. Holding several managers who turn out to own the same factors, it argues, amounts to a single bet rather than a diversified portfolio - a risk that June's unwind of crowded AI and commodity positions made concrete. Scale is no guarantee of stability either: the paper points to Jain Global, which launched in 2024 with around USD 5 billion and announced in April 2026 that it would return about USD 6 billion to outside investors under an exclusivity deal with a well-known multi-PM platform.
On the additional fee layer, AQUIS argues it should be judged on net returns and weighed against the cost of building an in-house program with research, due diligence, legal, risk and operational resources. The Abacorum factsheet lists a 0.75% management fee for Class A, while the share classes launched in February 2026, including EUR and CHF classes, carry 0.75% or 1.35% plus a 10% performance fee over a high-water mark.
Advisory demand picking up
The advisory business grew naturally out of the fund process. "Not all the great ideas that we monitor end up in the final portfolio of Abacorum. It could be liquidity reasons, AUM reasons or other motivations, but there is definitely room to share many more of these ideas with clients who may have more freedom to implement them on their end," Quargnali said. AQUIS is ramping up its efforts on customized solutions and advisory.
Mandates can be built around a specific strategy - a diversified portfolio of commodity managers, for example - using the firm's proprietary databases to filter the best-in-class managers of the relevant universe. Potential clients range from single and multi-family offices to private banks and institutional investors such as pension funds and endowments. "We are seeing more and more interest and demand, definitely at the European level. That is a good sign for the industry," he said.
The human element
Asked what excites him about hedge funds today, Quargnali pointed to the part no screen can replace. "It is still the human element. It is not just numbers and quant," he said. "You need to be recognized as a professional, but you also need to have the contacts and the access to the people and be able to listen and judge the person on the other side of the table."
Nor, in his view, is manager selection about to become one AI bot checking another. AI is speeding up many processes, he said, from investment intelligence to operational due diligence, and making them more efficient. "But the human element, from what we have seen so far, is still there and remains central."
|
RSS
