Ahead of the marcus evans Private Wealth Management Summit 2021, read here an interview with Gershie Vann discussing how to deliver the yield that investors are looking for.

1. How Private Wealth Managers Can
Capitalize on any Market Environment
Interview with: Gershie Vann, CEO,
Magma Capital Partners
“Investing in assets that are liquid, that
can perform well in all market environ-
ments, and are not subjectively based
on the manager’s thought process, are
going to be extremely desirable for
investors,” says Gershie Vann, CEO,
Magma Capital Partners. “Investors
today need to utilize innovative and
creative investment strategies to deliver
the returns that fixed income used to
provide,” he adds.
Magma Capital Partners is a fund
manager at the marcus evans Private
Wealth Management Summit 2021.
What are some of the biggest
challenges investors are struggling
with today?
Ten to 15 years ago, investors could get
a decent yield by investing in risk-free
instruments, but that is no longer the
case. Investors seeking to build a
portfolio that can consistently deliver
returns, with distributions in the range
of 4-5 percent, are in a unique predica-
ment today, as fixed income does not
produce yield the way it used to. There
is a lot of talk about the demise of the
60/40 portfolio strategy; investors
cannot allocate 40 percent of their
portfolio to assets that yield 1-1.5
percent. With the Magma Total Return
Fund, we balanced our allocation to
equities and treasuries, with treasuries
mostly serving as instruments to absorb
volatility. We strive to optimize our
portfolio allocations, such that we are
able to capitalize on the inverse rela-
tionship between equities and treasur-
ies. From there, we lever up to produce
the yield investors are looking for. It is
possible to have an allocation that can
produce phenomenal returns over any
period of time without being solely
exposed to equities.
How does your fund deliver con-
sistent, elevated returns irrespec-
tive of volatility and market condi-
tions? How have you “reframed
risk”?
We invest in 6 assets. The risk-on
assets are the S&Ps, Dow and Nasdaq.
The risk-off assets are all the instru-
ments along the treasury yield curve, so
short-term, intermediate, and long-term
treasuries, through ETFs. We then
divide volatility into quartiles, and
optimize the allocation of those 6 assets
for each of those quartiles. We looked
back at volatility over the last 15 years,
and ran optimizations to determine what
the best allocation would have been for
those states of volatility. We essentially
created 4 portfolios optimized for
different market environments. The only
remaining question, how do you select
the optimal portfolio on a daily basis?
Our answer is to utilize machine
learning models based on historical data
and predictive features. The model
makes selections at the market open,
market close, and in any instance in
which the portfolio moves by 1 percent.
We found this methodology allows us to
capitalize on any market environment.
The beauty of financial markets is the
ability to make money when the market
is up or down. Risk does not need to be
a liability; it can be an asset. Our fund
is agnostic to how the market is per-
forming on any given day.
What makes your fund unique?
The machine learning component of our
fund takes complexity to another level.
It requires investing in the infrastruc-
ture of the company, the quality of our
employees, and the creation of a
dedicated research team. This is what
truly sets us apart.
Historically, managers with investment
philosophies have made decisions
around their fund, but often those
decisions are discretionary and based on
what the manager thinks will happen.
We have removed the discretionary
component. Every decision we make is
statistically significant, and is supported
by what history tells us is likely to
happen.
But who could have predicted a
global pandemic that would affect
certain industries more than oth-
ers? Did the pandemic contradict
your research or methodology?
The pandemic was actually extremely
predictable. Of course the pandemic was
unexpected, but the markets played out
similar to how they did in 2008 albeit
slightly more aggressively. As the
machine learning model runs predictions
for the various volatility environments,
it ranks which portfolio is optimal until
the next scenario. If the market then
moves 3 percent in one direction, it
synthesizes all information from price
moves.
Volatility tends to spike when things like
this happen, because market partici-
pants, often start taking positions to
protect their portfolio. Market fluctua-
tions are more predictable than one
might think.
What makes your youth and inexpe-
rience an asset?
We are at a unique crossroads in the
alternatives industry. Historically, there
has been more of a need to produce
outsized returns, but now there is a
need for investment strategies and
methodologies that are uncorrelated
with the broader market. Coming to the
table as an outsider, approaching
problems without any pre-conceived
biases, is so important in crafting a
methodology that is genuinely different
from what is available in the market.
Being entrenched in the system for 20
years can make it more difficult to think
outside the box. Our youth is definitely
an asset. Having a team without
embedded modes of thinking can really
add value to the financial services
industry.
Risk can be
an asset

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Please note that the Summit is a
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number of participants strictly
limited.
About Magma Capital Partners
The Magma Total Return Fund, a quantitative hedge fund, is principled on the notion that humans should drive research and AI
should drive trading decisions. Magma leverages a systematic strategy, that utilizes machine learning to respond to volatility by
tactically allocating capital between asset classes. The Fund strives to produce above average returns over the long term,
regardless of economic environment, while limiting downside capture.
http://magmacapitalfunds.com
About marcus evans Summits
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To view the web version of this interview, please click here:
http://events.marcusevans-events.com/pwm2021-gershie-vann
Contact
Sarin Kouyoumdjian-Gurunlian, Press Manager, marcus evans, Summits Division
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About the Private Wealth Management Summit 2021
The Private Wealth Management Summit is the premium forum bringing leaders
from America’s leading single and multi-family offices and service providers
together. The Summit offers service providers and executives from single and multi-
family offices an intimate environment for a focused discussion of key new drivers
shaping the future of the industry.
www.f1.privatewealthsummit.com