I’m always reluctant to comment on articles that may be construed as advertisement for one particular firm. However, when I encounter an investment philosophy that matches my own—such as that of Bienville Capital, which was recently profiled in the article “Financial Engineers Killed the Art of Investing” by Institutional Investor—I can’t help but acknowledge how it resonates. Bienville’s philosophy is as close to my own as I’ve found, and I believe that there is as much art as science in investing.
In contrast to the endowment model of investing pioneered at Yale University and which is now ubiquitous, Bienville eschews traditional asset allocation strategies that do little more than push capital toward alternative managers. Instead, its model emphasizes a contrarian spirit and a willingness to step outside the box by exploring complex, often overlooked markets for unique opportunities that other managers frequently ignore.
In fact, such a maverick approach is increasingly one of the only ways to outsize risk-adjusted returns. The article’s author, Julie Segal, points out that the popularity of the endowment model has effectively commoditized alpha, depressing returns as hedge funds accumulate larger and larger reservoirs of capital. Therefore, nonconformity and a willingness to explore represent key competitive advantages for investors, who should be more open to contrarian ideas and look beyond contemporary cookie-cutter investment strategies.
Transcending the endowment and asset allocation models relies on stronger due diligence and discovery. That’s why Bienville developed a network of global experts, including consultants as well as other connections, to identify opportunities and share information. This allows investors to discover insights from an array of experts who can point them to potential areas of investment—and help them navigate their complexities—that would otherwise be passed over by others, and then they can then explore potential to generate outsized risk-adjusted returns.
Today’s investors rightfully prioritize alpha, but in doing so, they have pigeonholed themselves into investment strategies that ultimately lower the ceiling of their returns. By looking beyond the widespread endowment model and adopting a more contrarian spirit, investors can take a more creative approach to investing and enhance their returns.