Emerging markets investment: Former Merrill head joins Duet

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By:
Helen Avery
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Osman Semerci, Merrill Lynch’s former global head of fixed income, currencies and commodities, and co-president of the EMEA global markets and investment banking business, has joined $1.7 billion alternatives group Duet as its chief executive. Duet Group, which started in 2002 with just $10 million in a single fund, now has 14 funds, and is looking to further expand its range of strategies, in addition to growing its private equity business.

Last year, Duet added several new funds to its platform, including an equities special situation fund, a global macro fund, and a CTA fund. It also launched a long-only African tracker fund that invests in 10 countries. Co-founder and co-chairman Henry Gabay says it will also consider an emerging markets fund and a distressed fund if the time is right. "We’re building out funds based on individuals rather than the strategy itself," says Gabay. "So when we find a good team, we will expand."

Emerging markets are a strong focus for Duet, which was a factor in Semerci’s decision to join. "The emerging markets aspect was a big attraction, and the diversification of the firm," he says. "Duet is not a traditional hedge fund, but rather an alternatives business." Among Duet’s private equity funds are an India hotel fund, an Indian real estate fund, two Brazilian funds and a Russian commercial real estate fund. The group is also launching a Turkish fund. Semerci himself is Turkish.

"India is certainly a great source of investment opportunities, and we will be increasing our business there," says Gabay. Education, hospital and infrastructure funds are being planned. Gabay says the strategy of the firm is to be consistent and to take a long-term view. "We offer 30-day liquidity on our hedge funds, which are low volatility and seek returns of 10% to 15%. We have a different risk profile according to the environment among our hedge funds," says Gabay. "Our private equity strategy is slightly different, with a longer-term view of around seven years, and looks to generate returns of 25% to 30% a year."

While three years’ ago investors would have baulked at putting in money if returns were not in the high double digits, in the current environment, consistency and steady good returns have more appeal. Gabay says that Duet is seeing net inflows. "It’s a great team that I have known for many years, and the firm is at a really interesting stage," says Semerci.