Strong interest in PE funds for thematic exposure, says selector

Cameron Harvey, CEO of Landmark Family Office (LFO), is a highly experienced banking and finance professional with over 20 years of industry experience across the Asia-Pacific region.

He has previously held senior management roles at UBS, BNP Paribas and ANZ, where he was responsible for managing directly and indirectly up to $2 billion in assets in ultra high net worth client portfolios.

LFO was incorporated in Hong Kong in 2022 to serve the founding families and other high net worth clients and families.

The family office manages all its client assets on a discretionary basis.

“In general, we tend to make direct investments for our client portfolios,” Harvey told AsianInvestor.

“Where we invest into funds, it is generally into a niche strategy that we would not be able to easily replicate in-house such as a litigation financing fund, quant fund or an ETF backed by physical commodities.”

This interview has been edited for brevity.

Can you tell us about the share of funds in client portfolios. Are there any visible trends?

I will begin with the caveat that we manage all of our client assets on a discretionary basis.

So, while they provide us with the broad strokes such as risk profile, investment objectives, liquidity needs, their business and family structures and any other particulars they wish to note such as specific asset classes or geographies they may want to invest into or avoid, we make the individual selection decisions for each investment.

In general, we tend to make direct investments for our client portfolios.

Where we invest into funds, it is generally into a niche strategy that we would not be able to easily replicate in-house such as a litigation financing fund, quant fund or an exchange-traded fund (ETF) backed by physical commodities.

If there were any trends I could highlight, it may be that we tend to try to reduce our fund holdings where possible unless it is the absolute best way to access the sector or asset class – which can be the case for certain investments.

In terms of types of funds, there is a lot more interest and favouritism towards private equity (PE) funds.

Can you explain your broad approach to fund selection?

Our broad approach to fund selection involves evaluating various factors to ensure that the chosen funds align with our clients’ goals as well as their risk tolerance, financial objectives, and liquidity requirements.

Once defined these will help inform our selection of fund categories and asset classes.

These may include mutual funds, hedge funds, ETFs or private market funds across all asset classes.

We then evaluate fund-specific factors within each category or asset class.

First and foremost, we look at performance history, analysing the fund's past performance over one, three, five, and 10 years and compare this performance against peers and benchmarks whilst assessing consistency, focussing on funds with a history of stable and consistent performance.

Various risk metrics are taken into account by looking at standard deviation, beta, Sharpe ratio, Value-at-Risk, and alpha to understand risk and risk-adjusted returns.

Expense ratio is an important factor as it can significantly impact returns over the long term.

Another important factor is the turnover ratio - high turnover might indicate frequent trading, leading to higher costs.

Further cost considerations include any entry/exit load and tax implications.

Less important but still a factor is the fund size; generally speaking, we tend to avoid funds that are too small (less stable) or too large as they become less agile in market changes and fund returns often dissipate as assets under management inflate beyond a certain limit.

We look at the management of the fund; for example, fund manager experience which includes evaluating the track record and tenure of the fund manager.

We also assess the fund’s investment strategy so we can understand the fund’s investment philosophy and process.

What are the red flags you have seen while picking funds?

Warning signs/red flags include inconsistent returns over one, three, and five years; poor performance across market conditions, or a lack of recovery from consistent losses.

Hidden charges, such as entry or exit loads and high turnover ratios, are also concerning, as are frequent changes in fund managers or deviation from the fund’s stated mandate.

We monitor for rapid declines in assets under management (AUM), excessive churning that inflates costs, and poor risk-adjusted returns, such as low Sharpe ratios or alpha.

Funds that rely on speculative market timing instead of disciplined strategies are avoided.

External factors like downgrades from rating agencies, negative analyst reviews, or regulatory and ethical concerns, such as undisclosed risky investments, are other critical red flags.

What are clients asking for right now? How do you expect that to evolve over next 12 months?

We have seen strong interest from our clients and the market in general to access PE funds to gain exposure to thematics such as artificial intelligence, clean energy and other technologies that will dominate the investment landscape in the future.

We are in the process of launching our first PE fund – Landmark Family Office Future Fund – which was requested by one of our clients who is seeding the fund.

The reason for this demand is two-fold – investors can see the opportunities that are presented by, for example, artificial intelligence, but don’t know how to access the sector.

Secondly, even if they know how to access the private markets, they may not have the deal flow or networks to access the best deals and then the resources and knowledge to conduct proper due diligence which is necessary when assessing opportunities to ensure the investment is sound.

In terms of evolution, we expect this trend and demand to exponentially increase over the next 12 months as the investment thesis plays out in global markets.

What kind of ESG criteria do you consider important while picking funds? How has that changed over the past 5-8 years?

We place significant importance on environmental, social, and governance (ESG) criteria when selecting funds and in our overall investment selection process.

Over the past 5-8 years, ESG investing has evolved significantly. Transparency has improved with frameworks like the Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI), and many jurisdictions now mandate ESG reporting.

Climate action, diversity, and worker welfare have gained prominence, while governance now emphasises data ethics and accountability.

Looking ahead, we expect ESG investing to become increasingly data-driven and impact-focused.

Innovations such as AI-enabled ESG analytics and blockchain for supply chain transparency will enhance the ability to measure real-world outcomes.

The emphasis will shift further from mere compliance to ensuring that investments deliver tangible social and environmental benefits.