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Technology > Investment Platforms > Turnkey Asset Management

CTA and FX

By Staff Writer

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SOLANA BEACH, Calif. (HedgeWorld.com)–Sunrise Capital saw its assets grow by US$110 million in the first half of 2002, bringing capital under management in its currencies and futures programs to US$900 million.

Although investor interest has increased for Sunrise programs, most of asset growth has been fueled by solid returns rather than inflows of new capital, said Marty Ehrlich, vice president. “We think this is really the best way you can grow–through profits. Our goal isn’t to be the biggest manager in terms of assts. Our goal is to do a good job providing non-correlated returns to investors and make them money,” Mr. Ehrlich said.

Sunrise has seemingly been doing that in bucket loads so far in 2002. Through the mid-year mark, all of the firm’s currencies and futures strategies were up on the year and some in mild double digits, he said. The S&P 500 and other traditional benchmarks as well as some alternative ones have been slumming by comparison.

Strong trending in currencies, headlined by a precipitous fall in the U.S. dollar, gave both Sunrise’s FX-focused strategies and diversified trading programs the biggest lift. Diversified strategies run by the firm include a combination of currencies, financial futures and commodities.

Sunrise’s growth has been steady but remarkable over the years. While other, many larger, CTAs saw their assets decline after a slump in 1998 that coincided with a downturn in global macro strategies; Sunrise has flourished. Its assets under management are up a whopping US$700 million over 1995 levels.

Sunrise is also helped by the fact that much of its clientele comes from the institutional investment world with a healthy dosage of funds of funds allocations. Many industry insiders say that managed futures are often overlooked by multi-manager strategies.

“I speak not just for Sunrise, but as an advocate of managed futures in general. I really believe that CTAs can play an important role in a fund of funds portfolio because of their lack of correlation to equities and other hedge fund styles and hedge fund indices,” Mr. Ehrlich said.

Sunrise has no intention of letting success go to its head, according to Mr. Ehrlich. Although many financial futures and currencies markets are deep and highly liquid, capacity is still an issue. “At some point, even we will have to close our programs. I’m not sure if that’s six months or six years from now, but it will happen,” he said. “The mistake some other CTAs have made is taking to much money in such a way that they can’t diversify because some of the agricultural markets aren’t as deep. In those cases, you really have to close those funds to new money. Risk management is the key.”

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