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Dynamic strategies

Published in Automated Trader Magazine Issue 38 Autumn 2015

In the early 2000s, Bruno Pannetier had a great idea for structured products. Instead of working with static baskets, he would define systematic rules for dynamic strategies. Pannetier tells Automated Trader how that idea has evolved.

Bruno Pannetier, Old Park Capital

Bruno Pannetier, CIO, Old Park Capital

Automated Trader: What led you to your position as CIO at Old Park Capital?

Bruno Pannetier: I've been in the financial industry since 94 and spent most of my time working for French banks and in the structured products industry. I was one of the people who created the industry of so-called retail structured products based on stocks or indices to provide a way for retail investors to get involved in the stock market, but usually in the capital guaranteed or protected way. These products were sold through retail, bank, or insurance networks throughout Europe.

You have all kinds of bells and whistles in the structured products world, but usually they are pretty standard. In 2002/2003, I had this idea of working on a new direction of structured products.

The whole idea was instead of working on static baskets, to work on a dynamic basket, so basically define systematic rules, which will define the weights of individual stocks in the basket. And this became a new industry, which is at the confluence of the structured products industry and the asset management industry.

Defining a dynamic basket is actually defining dynamic strategies and this gave birth to what is now a big industry in the structured products world. In any bank today you have a team dedicated to these dynamic or strategic indices.

I started this when I was working in France, but it became big when I came to London in 2005 to join Bear Stearns as a senior managing director and head of structured products, with a main mandate to target institutional investors with dynamic strategies.

We were actually competing in the alternative management world, because what we were offering was an alternative to hedge funds.

We were doing extremely well on the equities side of the business, but obviously Bear Stearns had another side, the credit business, that was not doing that well, and brought the bank down. So when Bear Stearns collapsed, I took the team to Macquarie Bank to set up a new department, named the Institutional Investment Solutions Department, and continue the exact same business - creating, trading and marketing systematic dynamic strategies with a focus on low volatility, low draw down.

This was between the summer of 2008 and spring 2009, and we raised $1.6 billion at Macquarie in a difficult environment. But because Macquarie was more focused on funding and financial crisis related issues, we decided to go independent. We started Old Park Capital in May 2009.

AT: How big are you?

BP: We have $300 million in assets under management. We are 15 people based in London with two main businesses, an institutional business and discretionary wealth management business. We have some UK clients, but most of our clients are International clients.

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