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Get Four
|  | FEBRUARY 23, 2006
By Diane Brady Coming Soon to Your TV: SuperfundIn the hedge fund industry, hype is up and returns are down. Christian Baha thinks now is the perfect time to promote his "virtual" offeringLike so many other people during the 1990s, Anthony Gordon bought an eclectic range of stocks and watched with amazement as his portfolio bulged. By 2000 he had holdings worth $1.8 million. "I was elated but unnerved. It didn't seem normal," says the photographer, who lives in a loft apartment in Manhattan's trendy SoHo neighborhood. Then the bubble burst, taking Gordon's tech- and telecom-heavy portfolio down to a value of $80,000 by 2001, a disaster that he blames on his broker. "The guy told me I had the equivalent of a diversified mutual fund, but he didn't rebalance," Gordon says. Suddenly the market was no longer his friend. "I became cautious, weary, dubious, and concerned." But not so cautious that his interest wasn't piqued two years later, when a fellow airplane passenger mentioned something called Superfund. Then he saw a cable-TV commercial in which a young man with a long, dark jacket and a clipped accent reminiscent of Arnold Schwarzenegger's said "Guten Tag." The man on the screen introduced himself as Christian Baha, the founder of Superfund. CONSUMER INTRIGUE. After acknowledging that viewers "probably have no idea" what kind of investment he was promoting, Baha added that "regulations prevent me from describing it on television." Gordon, who is now 42, wasn't wowed by the ad's sophistication: "I would have had him wearing a headset in front of four or five computer screens, not using a phone with a cord and a little laptop." But Baha's pitch of hedging against another potential stock crash, especially at a low cost, appealed to him. He put $5,000 in Superfund and has since invested $22,000 more. Gordon was an early catch when the Austrian fund entrepreneur first probed the U.S. market in late 2002. Now, Baha is pumping up his marketing in the U.S. -- including new TV ads in March -- and trying to capitalize on consumer fascination with "alternative" investments amid a largely stagnant stock market. Hedge funds have headlined the alternative craze, which is the hottest investment trend since the dot-com runup. CELEBRITY PIZAZZ. So it's no wonder that Baha in an interview describes Superfund as "virtually a hedge fund." It's also one with a distinctly show-business sensibility. In Europe, Superfund draws attention by sponsoring professional soccer, basketball, and Formula One racing teams. "This is seen as a hedge fund for the average person," says paid spokesman Niki Lauda, the retired Austrian driving legend. None of Superfund's rivals in the U.S. can brag that they underwrite celebrity-award shows honoring the likes of Desperate Housewives star Teri Hatcher and designer Donatella Versace. Baha also takes pride in his unconventional career path: Before he got into the fund business, the voluble 37-year-old worked as a beat cop, patrolling some of Vienna's tougher blocks. Last year he opened a sparkling 7,000-square-foot investment center on Manhattan's Fifth Avenue. Baha may be more flamboyant than his better-known U.S. rivals, but he embodies a new and frenzied atmosphere in which fund companies from Merrill Lynch (MER ) to Charles Schwab (SCH ) are trying to lure the less-than-wealthy into the hazardous realm of alternative investing. Superfund Group, to be precise, offers managed futures funds, which let investors make such esoteric plays as shorting currencies and betting on cattle prices. It's a strategy used by some hedge funds, and the two types of investment vehicles are close enough cousins that many financial firms lump them together. GROWING SKEPTICISM. Based in Monaco, Superfund boasts $1.7 billion under management and 370 employees in 19 offices around the world. As do hedge funds, it charges steep incentive fees while promising high returns regardless of broader market conditions. Both types of funds tend to favor secretive, risky investing methods. Gordon, the New York photographer, like other Superfund investors, doesn't know what markets his money is in. "You have to have trust," he says. The alternative-investment boom has reached a critical juncture. After a rush of new money and soaring returns from 2000 through 2004, many hedge and managed-futures funds floated back to earth last year. Financial advisers say the institutions and wealthy individuals traditionally drawn to alternative investments have grown leery. The $1.1 trillion hedge fund industry saw net outflows in the fourth quarter of 2005, and fund tracker Barclay Group reports that the $130 billion managed-futures business shrank by 1% for the year. But as the smart money starts to pull back, Baha and scores of competitors are amplifying their appeals to smaller investors such as the trustful Gordon. TRUCKIN' DOWN THE HIGHWAY. Superfund's main fund lost 10% in 2005. It has a name that many Americans associate with toxic-waste sites. And yet coming next month, along with the new wave of U.S. TV commercials, will be a national print-advertising campaign, a series of investor seminars around the country, and direct mailings to 600,000 brokers and advisers and to millions of potential customers. Imitating a stunt he has employed in Europe, Baha is building a mobile investment office that will travel across the country on an 18-wheel truck. Only 4,000 of Superfund's 50,000 investors worldwide are Americans, but Baha cheerfully emphasizes that the U.S. client base grew by one-third last year. Nothing if not upbeat, he stresses that most of his customers saw gains of at least 7% in the month of January, easing the pain of last year's losses. "People pay attention to performance," he says, playing down Superfund's volatility. "Everybody who invests in stocks would be much better off to invest in hedge funds."
BW MALL
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