A subadvised shop with 10 years in the alternative investment seeding business is looking to boost its liquid alt mutual fund lineup over the next several years, based on three key criteria. Meanwhile, they might expand their event business into the mutual fund space, too.

John Culbertson Context Asset Management Chief Investment Officer

John Culbertson, managing director and chief investment officer of Context Asset Management, confirms that he's "definitely still interested in single-manager, single-strategy mutual funds." In 2014 Context launched and then wound down a multi-manager liquid alts mutual fund; they launched their first single-manager mutual fund (over $100 million and counting) a year ago, and this fall they launched their second single-manager mutual fund, the Context Strategic Global Equity Fund powered by Granite Peak.

"We're close on probably two more," Culbertson tells MFWire. "If we had five products in the next 18 months to two years, I think we'd be pretty pleased with that."

"We see a path to that kind of number," Culbertson adds.

When evaluating managers and their strategies, Culbertson says, the Context team defines a strategy's success using "three really simple criteria":

1) The return stream should be differentiated ... 2) For every incremental dollar of risk that you take, you should be getting an incremental dollar of return ... and 3) A sense of asymmetry. I should expect to make more money than I can lose in my alternative investment ... Not many funds have held up [to those three criteria].

The liquid alts space boomed after the 2008-2009 financial crisis, and eight years later Culbertson sees the marketplace evolving.

"It's gotten harder because the land grab has happened already," Culbertson says. "Strategies we like tend to be more niche-y, things like statistical arbitrage, lower capacity, factor-driven fundamental investing, systemic strategies, CTA-like [commodity trading advisor]."

"Over time the market will become more sophisticated, more discerning, about how these products should be used, and when that happens we'll get higher quality product," Culbertson adds.

Meanwhile, Context also runs Context Summits for connecting institutional investors with hedge funds.

"We're working on other events that would look just like that" in the mutual fund space," Culbertson says. 

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