Dr. Heri is the former CFO and Chief Investment Officer of Credit Suisse Financial Services.He is also the former CFO of AXA Insurance Group, former member of the Board of Directors of Winterthur Insurance Group, Valartis Group, Hilti Corporation?.He is Professor of Economics and Applied Statistics at the University of Basel and an Adjunct Professor at the Swiss Finance Institute in Zurich.Erwin Heri is the author of eight books on Financial Theory and practical applications thereof on an academic level but also for state-of-the-art "practical investments for the man on the street".
The most recent work appeared in 2011 ("Das verlorene Jahrzehnt" ("The lost Decennium")).
A former title ("Die Acht Gebote der Geldanlage", 1999) was a Bestseller in Switzerland and was translated into several languages, e.g. Chinese.?
Currently,apart from his teaching, he is a Senior partner of fintool.ch, a financial literacy web-site.
Back in January I attended a Dimensional investment conference in Frankfurt where Erwin Heri, who is the Professor of Financial Theory at the University of Basel, gave a fascinating presentation.
Professor Heri told the delegates about his role advising the Guinness family, and the study he had undertaken in connection with hedge fund investments over the preceding three-year period.The Guinness family had expressed the desire for Professor Heri to investigate whether they should allocate some of their investment funds towards hedge funds.
This was because they had picked up on the fact that many of their neighbours in the West End of London were hedge fund managers, not only driving some fabulous cars but also living in the same expensive part of London as themselves!
They therefore assumed that if the hedge fund managers could afford to live in the same area that their investment strategies must be successful, and therefore potentially worthy of inclusion within their own portfolios.
At the time Professor Heri expressed some doubts about the reliability of hedge funds and whether they would indeed be worthy of inclusion but nonetheless began the study of the data.
Coming from his academic background, he agreed to undertake a three-year research project on hedge funds.
After significant due diligence, and with the backing of the Guinness family behind him (which obviously opened up a significant number of hedge fund doors to him that would not normally be available to retail investors) he selected six hedge funds that demonstrated potential out-performance and were then worthy of further consideration.
He then explained to the delegates that a three-year project began where the Guinness family invested an initial amount within these six hedge funds, with a view that if over the three-year period the funds could demonstrate out-performance they would then invest significantly larger sums.
Obviously this would have been a great incentive for the hedge fund managers to try and achieve out-performance in hope of additional assets to follow in the future.
Professor Heri then explained and demonstrated the performance track record of the six funds.
What was fascinating was that all of the six funds under-performed a conventional portfolio of equities and fixed interest, and some by quite a significant margin.
This was during a time of rising investment markets and therefore you would have thought it would have offered the potential for the hedge fund managers to deliver upon their promises, and to provide investors with enhanced returns during this favourable investing time.
However, the actual results were very different.
At the end of his presentation the conclusion that Professor Heri came to was that even though some of the hedge fund managers were no doubt highly skilled, a significant contributing factor to their under-performance had been the high charges within the hedge funds.
This included not just high regular ongoing charges but also high performance-based fees, which ultimately unfortunately eroded the return for the end-investor.
The findings of Professor Heri mirrors our own sceptical views on the hedge fund industry.
Erwin W. Heri is Professor of Financial Theory at the University of Basel and Swiss Finance Institute Adjunct Professor.
At present, his activities in the academic field as well as in the field of investment consulting are: Chairman of "Valartis Bank AG" and for many years President of the investment commission of "Publica" the pension fund of government employees.
In addition his is Chairman of a British family office.Formerly, he was an active board member of international renowned financial service providers e.g. Chief Financial Officer at "Winterthur Versicherungen" as well as CFO and Chief Investment Officer at "Credit Suisse Financial Services".Erwin W. Heri also holds mandates at several advisory boards and is author of numerous books and articles.
Dr. Heri is an associate professor for financial market theory at the University of Basel and visiting professor at the University of Geneva; Chairman of the investment committee of Publica and a Member of the Board of Directors of Ciba Specialty Chemicals; Losinger Construction AG. and Sofisa Société Financière S.A.He is also Chairman of the Board of Directors of Valartis Group AG and Valartis Bank AG.From 1995 to 1999 Erwin Heri was CIO of Winterthur Versicherungen and following the company's takeover by Credit Suisse, CIO of Credit Suisse Financial Services.He has been an independent business consultant since 2003.
Thank You for Downloading!
1. Download ZoomInfo Grow
2. Run Installation Wizard
3. Check your inbox to Sign in to ZoomInfo Grow