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Infrastructure and People
Beach Horizon LLP is run by three partners; David Beach, Sanjeev Lakhanpal and Dr Paul Netherwood and also Alan Goulding (Principal). Beach Horizon now has a team of 12 people and is utilising the experience carried over from the infrastructure and personnel of Beach Capital Management (BCM), to form a robust and innovative investment management company.
Beach Horizon has a mature institutional grade infrastructure that was initially developed at Beach Capital Management. Beach Horizon continues to enhance its capabilities, particularly in the area of Straight Through Processing (STP), which enhances the firms’ operational efficiency.
The Organisation
The management team are responsible for fund management, business strategy and research. They are also involved with the day-to-day activities of all of the business functions in Horizon.
The trading team is highly experienced which is essential for trading many of the commodity markets which can be difficult to trade. Research is done by the partners supported by the technology team. The operations team manage all aspects of back office including dealing with investor managed accounts.
History
David Beach began trading his strategy in 1989 at Sabre and then at GNI. In 1998 David founded Beach Capital Management (BCM) to run his flagship fund, the Discretionary Programme. The Discretionary Programme was a managed futures, trend-following strategy that used an innovative rules-based approach based on price patterns with a discretionary overlay. At its height, BCM held over $1.4bn in assets under management, which at the time, put the firm in the top 10 globally of managed futures strategies based on size.
In 2001, Sanjeev Lakhanpal, who was a senior trader at BCM instigated a project to build a fully automated, systematic managed futures programme that would compliment David’s Discretionary Programme. Paul Netherwood then joined BCM to begin work on the project to build the trading system that was to become the Beach Horizon Programme. In 2002 Alan Goulding also joined to accelerate development and enhance the team. Sanjeev, Paul and Alan all worked in trading, research & development at AHL (now Man Investments) during its formative years. AHL was one the key pioneers in systematic fund management, and are now one of the world’s largest funds.
In March 2003 the Horizon Programme started paper trading. After a period of extensive testing and integration into the BCM environment, the programme went live in May 2005. Beach Horizon LLP was created in May 2004 as a subsidiary of BCM and was separately registered with the FSA and the NFA.
In March 2006 David Beach, after 17 years trading the program, for personal reasons decided to retire as Fund Manager of The Discretionary Programme. Since it’s inception in June 1989, the Beach Discretionary 1XL composite Programme has returned an annualised average of over 19% net of fees. The programme closed at a new fund high and all assets were returned to investors. BCM ceased trading and Beach Horizon LLP became an independent entity. David is the senior partner and Chief Investment Officer at Beach Horizon LLP. He is actively involved in all aspects of the business including research. The core staff at BCM, including trading, operations, IT, research and marketing transferred from BCM to Beach Horizon LLP. Beach Horizon also took on the mature, institutional-grade infrastructure that was developed at BCM and continues to enhance them today.
From left: Alan Goulding, David Beach, Paul Netherwood and Sanjeev Lakhanpal
David Beach
Mr Beach joined Sabre Fund Management Limited in 1989 where, in addition to trading the main Sabre fund, he was in June 1989 allocated the initial capital to begin actively managing money in his own programme. Prior to joining Sabre Fund Management Limited Mr Beach worked for L. Messel & Co (subsequently acquired by Sherson Lehman) as a research analyst, having graduated from Kent University with a first class degree in mathematics. In May 1994, Mr Beach joined GNI Fund Management Limited to further develop his trading programme and manage the assets of the GNI Technical Programme and fund. He established Beach Capital Management Limited in 1998, where he operated the Discretionary programme, a successful managed futures programme. David has a track record spanning 20 years. He retired from managing the Discretionary programme in March 2006. David is a founding partner in Beach Horizon and has been involved in the programme since inception.
Sanjeev Lakhanpal
Mr. Lakhanpal is a founding Partner of Beach Horizon LLP with responsibilities for trading, investment management and research for Horizon. Mr. Lakhanpal was responsible for the inception, design and building of the Horizon trading system. Until 2005 he was also a Senior Trader at Beach Capital Management Limited. Before joining Beach Capital Management Limited in 2000, Mr. Lakhanpal was the Trading Manager at CA Investment Advisers with additional responsibilities for trading system research. Mr. Lakhanpal started his career at AHL (now Man Investments Limited) as a Data Engineer in 1992. He then joined the Trading Department and later became Trading Manager. Mr. Lakhanpal had a number of roles including responsibility for the execution of fund trades where assets under management were in excess of $5bio. He founded Beach Horizon in 2005. Mr. Lakhanpal has a BSc(Hons) in Physics from King's College London and an MSc in Finance from Brunel University.
Dr Paul Netherwood
Dr Netherwood is a founding partner of Beach Horizon LLP with responsibilities for investment management and research for Horizon. He was responsible for designing and building the Horizon trading system. He has over 16 years experience in designing and building trading systems and large-scale risk management systems in a number of investment banks. Paul started his career at AHL (now Man Investments Limited) in 1993 where he was involved in automated trading system development. He later became Head of Business Object Modeling at Nomura. Following that, he was Chief Architect at a risk management software house responsible for building Credit Risk Management systems for Deutsche Bank. He joined Beach Capital Management in 2001 and founded Beach Horizon in 2005. He has a PhD in Pattern Recognition and a BSc (Hons) in Computer Science from Kingston University.
Alan Goulding
Mr. Goulding is principal in Beach Horizon LLP with responsibilities for investment management and research for Horizon. He was responsible for designing and building the Horizon trading system. Alan started his career in 1993 at AHL (now Man Investments Limited) where his responsibilities included automated trading system development and risk management systems. He has worked as a software architect and software engineer in investment banking and fund management for the last 16 years. Previous employers include a software house specializing in credit risk management software and Credit Suisse First Boston where he designed and implemented risk management and front office trading systems. He joined Beach Capital Management in 2002 and founded Beach Horizon in 2005. Alan has a first class Honours degree in Computer Science from Cardiff University.
Technology
The Horizon model employs a rigorously applied systematic and technical approach which is fully automated using a computer based trading system. This systematic approach ensures the exclusion of any discretion in investment decisions. This approach greatly enhances risk control and therefore increases the chances of achieving superior and consistent returns.
Our philosophy of fully automated trading systems demands a high investment in technology. The Horizon Programme uses the latest technology to run the automated trading system. All systems are bespoke created by our software team in order to meet the exact needs of the fund. The system is written in Java and uses recent advances in architecture driven and pattern-orientated design to deliver a trading system that is as robust as it is versatile.
The system is highly scalable and makes sub second trading recommendations. It is capable of implementing real-time trading methodologies for many different funds and a large number of clients. The ability to run in real-time allows the system to apply continuous risk management adjustments and significantly reduces slippage. Full automation has allowed the same trading system to be back tested in a variety of market conditions, portfolios and time periods.
Beach Horizon uses electronic trading (also known as Direct Market Access or “DMA”) in order to minimise transaction cost and execution delay. This is employed in parallel with a conventional trading desk. An order management system routes trades either to the trading desk or via DMA based on liquidity and size constraints for the market being traded - the less liquid markets and larger orders being handled by the trading desk. In addition, the traders can opt to execute some or all of an order routed to them via DMA if they feel the liquidity is available.
The system does not require the expert knowledge of one person in order to run. It is designed to run with minimal intervention. Risk management and operational reports are produced automatically to ensure that the integrity and efficiency of the system is maintained.
The infrastructure is replicated in our disaster recovery centre based in Beckenham, Kent. Every transaction made in our London machine room is immediately replicated to our servers in our DR Site. At any time the business can move operations to the DR site with minimal business interruption.
The builders of the system have had a long history of working with automated trading systems and also working with large-scale risk management systems for investment banks. The risks of operational, system and infrastructure errors are often underestimated. Any system downtime would seriously affect the performance of the fund as would trading errors. Funds traded from spreadsheets, for example, do not have the infrastructure to cope with the demands of many markets, clients and funds. The technology has been built with the scalability, resilience and reliability required for a dependable service now and into the future.