Aurum marks 25 years of quiet success
Aurum Fund Management Ltd has achieved remarkable things since it was founded in Bermuda on August 11, 1994.
The fund of hedge funds management firm has won more than 50 industry awards for earning its investors steady returns, regardless of market direction, and today has about $2.3 billion of assets under management.
Even more impressively, Aurum has spent many years quietly ploughing millions of dollars into high-impact environmental and philanthropic projects and charities.
The group has offices in Aurum House, at 35 Richmond Road, Hamilton, as well as a significant operation in London, where most of its 54 employees are based.
Key members of its team are based in Bermuda including Dudley Cottingham, the president and co-founder, Adam Hopkin, vice-president, and directors Tina Gibbons, Michael Harvey and Nancy Morrison.
Longevity is a feature among the staff and almost four-fifths of employees have been with Aurum for more than five years.
Aurum held a group meeting on the island this month, as it does periodically, to make key decisions on the business and its future.
Kevin Gundle, chief executive officer of the group’s London operations, and a founding member of the group, stressed the group’s commitment to Bermuda, to its investors and to addressing environmental, social and governance issues.
“We were practising ESG long before it became mainstream,” Mr Gundle said. “We have a track record of more than 15 years.”
ESG is part of Aurum’s business philosophy on the simple basis that “generating long-term sustainable returns is dependent on environmental, social and economic factors” and that “a business that is not in harmony with the ecosystem within which it functions is doomed to fail”.
Aurum’s Impact Investment solution, which launched in 2002, gives investors the chance to earn investment returns and also make a difference. One hundred per cent of the advisory fees support several charities, including Synchronicity Earth, a sustainability-focused charity based in Bermuda whose founder and chairman is Adam Sweidan, Aurum’s chief investment officer. The intention is for these dollars to be directed where they will have maximum impact.
“Apple has high ESG ratings, but you won’t have any impact by investing in Apple,” Mr Gundle said. “Synchronicity Earth supports physical research projects looking at things like oceans, fresh water, forests and species regeneration by the most effective non-profits.”
Such research can then guide governments or the private sector on pursuing environmental protection or regeneration projects, he added.
One local example was a study, funded by Aurum, of Bermuda’s waters based on satellite data from 2013 to 2016, looking for signs of illegal fishing. Aurum also helped to fund the Ocean Risk Summit, an event held in Bermuda last year that brought together representatives of business, government and science to discuss responses to unprecedented changes occurring in the ocean.
Aurum also works with Ark (Absolute Return for Kids), an international, education-focused charity cofounded by Mr Gundle. Mr Gundle is also a patron of the One to One Children’s Fund, a charity that aims to rebuild and transform the lives of vulnerable children.
Aurum has cemented its ESG credentials by signing up to the United Nations Principles for Responsible Investment, committing to the six UN PRI principles and its reporting framework.
Mr Gundle estimates Aurum has given away well over $10 million to environmental and social causes over the years. To mark the 25th anniversary, the group will ramp up its charitable efforts, with beneficiaries including the WindReach facility in Warwick.
Aurum has no concerns about economic substance legislation that was brought in at the end of last year to address EU concerns about companies based in low-tax jurisdictions that lacked operational presence.
Mr Hopkin said: “We are a shining example of what constitutes economic substance, in the money we spend here, the directors we have based here, the board meetings we hold here and the strategic decisions we make here.
“We do not do this because of pressure from the EU, we do it, because it’s the right thing to do.”
Aurum’s commitment to doing things properly is exemplified by the firm voluntarily jumping through regulatory hoops to acquire an investment business licence from the Bermuda Monetary Authority, when the group is exempt from supervision by the regulator because its investors are “qualified participants”, that is institutions or high-net-worth individuals, under the Investments Funds Act.
Aurum manages multi-strategy hedge fund portfolios with the aim of producing returns uncorrelated with the financial markets that cannot be achieved with traditional investments like equities and bonds.
The group does not fit the stereotypical image of hedge fund managers, taking big risks in the chase for high returns — just the opposite, in fact.
Not only does Aurum drill down deep into the funds and strategies it considers investing in, but it also looks carefully at each fund’s operational risks. Any shortcomings found mean the fund is avoided.
The result for Aurum investors has been steady growth, even through the recession following the “dot-com boom” in the early Noughties, and suffering barely a blip during the global financial crisis of a decade ago, when the stock market collapsed.
Avoiding what Mr Gundle described as the “capital destruction” of market troughs has led to outperformance in the long run, because, as the CEO added, “when you’re down 50 per cent you have to climb 100 per cent to get back to where you were”.
The approach has proved attractive to many pension funds and wealthy individuals among Aurum’s clientele and could also work for Bermuda’s growing cohort of life reinsurers, Mr Gundle suggested.
Winning business from property and casualty re/insurers has proved more difficult, because regulators and rating agencies treat “alternative investments” as risky, an approach that seems ironic when Aurum’s track record of successful risk mitigation is considered.