Moscow-born Estonian, German Lillevali, challenges traditional strategies by using algorithms. Now he wants to expand with GL Asset Management from Switzerland.
German Lillevali, your investment strategies are based on mathematical algorithms. What is the advantage of such strategies compared to traditional investment strategies?
Fundamental analysis evaluates a company or gives assessment of the potential growth (or decline) in the case of the company being undervalued or overvalued.
Moreover, the classic portfolio theory allows you to define the optimum exposure. But only the mathematical approach, namely algorithm built on mathematical models, allows you to uniquely determine the point and level of the position and its further management.
In your algorithms you use market anomalies (mispricings). What is it?
It often happens that investors emotionally overplay some events or news causing speculative volatility in the market. Our main objective is to identify such market anomalies. Just at this point the tools of statistics help us reveal these movements and deep fundamental analysis of the company becomes an additional filter, helping to differentiate temporary correction from a new evolving trend.
«We maintain the balance of long and short positions»
However, quite a large number of different trading strategies fall within this definition. Our distinguishing feature is sustainable zero-beta to the market, or, in other words, we try to build market-neutral portfolios, that are neutral to market movement.
Your investment scheme is «market-neutral» – does this mean that macroeconomic indicators are irrelevant for you?
Yes, all our positions are market-neutral, which means that we maintain the balance of long and short positions. This approach gives extra immunity to our portfolio from adverse macroeconomic factors, while retaining the possibility of earning on price movement within a pair.
«The company is not a hedge fund in the traditional sense of the word»
A pair, a combination of stock of two companies with practically identical business-models makes the basis of our strategy. Of course, there are many subtleties and nuances, for example, in the implementation of risk management ensuring our leadership, but the basis of our trading approach is precisely the pair trading. That is the strategy we have adopted in the GL Algomatica fund.
GL Asset Management – is it a hedge-fund?
No, the company GL Asset Management is not a hedge fund in the traditional sense of the word, even though some of its parameters may resemble hedge fund strategy.
These are the key features that distinguish us from a hedge fund: All of our funds are regulated Luxembourg funds, while classic hedge funds are unregulated. And we present statements on a weekly basis, and investors have the option of cashing out, also on a weekly basis.
Who are your target audience?
We primarily service qualified investors, high net worth individuals (HNWI) and ultra-high net worth individuals (UHNWI), family offices, third-party asset management companies, and institutional investors.
«The bulk of our customers invest from 500,000 euro and above»
We do not work in the retail market. We are permitted to work with investments from 125,000 euro, but judging from our practice, the bulk of our customers invest from 500,000 euro and above.
What is the staff and organizational structure of your company?
We have 17 highly qualified staff, most of whom have more than 20 years of experience in leading financial investment institutions. The GL Asset Management headquarter is in Zurich, we also have offices in Geneva, London, Limassol and Munich.
What are your plans for further development?
We will continue to follow our philosophy of providing investors with market-neutral asset management instruments. To this aim, in the end of March GL Asset Management presented statistical arbitrage models both in Geneva and Zurich to selected market players and qualified investors.
«We plan to strengthen our international presence»
We demonstrated our innovative investment approach while describing the unique instruments such as GL Statistical Arbitrage and GL Equity Long/Short strategy. And we received very good feedback from the representatives of the investment community.
We also plan to enhance our experience and expertise by expanding the team - we are constantly searching for unique specialists, who will ensure the on-going improvement of our investment models.
Finally, we plan to strengthen our international presence, because one of our main guiding principles of the company's growth is to be closer to potential customers.
Your life principle is challenging the traditional way of thinking. What does this mean for you?
Breakthrough in any sphere of activity is impossible without critical review of the established patterns of thinking and behaviour. Market-neutral strategies is exactly the kind of breakthrough, and their development was made possible due to a radically new approach, combining methods of fundamental, technical and statistical analysis and complex algorithms, based on the latest achievements in the development of artificial intelligence and integrated processing of market data.
«We knew the strengths and weaknesses of these models from the start»
Many investment companies offer standard asset management models. We knew the strengths and weaknesses of these models from the start, and we understood that we had to follow the strategy, that would enable us to preserve and multiply capital of our clients.
When entering the market, we understood that investors were concerned, above all, with stability and certainty and it was innovative thinking that helped us move away from traditional investment in stocks and focus on developing market-neutral approach that provides our clients with a solid return at low risk.
German Lillevali is an entrepreneur with over 20 years of experience in the financial services and investment industry. He is President and founder of GL Financial Group. GL Asset Management (headquartered in Zurich, Switzerland) is part of the group and focuses on market neutral investment strategies.
Born on in 1964 in Moscow, Lillevali has Estonian and German roots. His father is a descendant of the German family of Blumfeldt (the surname Blumfeldt was translated as Lillevali in the 1920s). In 1996, Lillevali focused on investment and financial business as he began collaborating with his European relative Werner Blumfeldt to develop their family business of providing financial services. In 2013, he headed the business and merged the assets within the GL Financial Group.
