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phasis on the incentive component of compensation and less on the fixed management fee.

Low-key and unassuming, Henry has long carried considerable clout in the managed futures community. I have always known him to be a visionary. At an industry association conference in 1995, he delivered the keynote address where he talked about the need for managed futures traders to reduce fees and beef up risk management techniques to attract institutional investors. He felt that attracting institutional investors was the key to the long-term survival of the managed futures industry. Many of his peers were not happy to hear this, and even some in his own firm did not accept the thesis.1 Yet in the long term, he will probably be proven correct.

Henry says JWH tries to follow a kaizen philosophy (i.e., continual improvement), which is similar to that used by Ned Johnson at Fidelity Investments.

JWH has often been the first to develop new products in the managed futures subcategory. Henry has made strides to develop efficient total-return swaps. While this product is not different than many of the swap products on traditional indexes, JWH has made significant advancements in the leveraging and deploying of capital in those swaps. JWH has also developed improved structures for notes that take much of the discretion out of the leveraging decisions. This should give greater comfort to buyers who want and need to know all of the rules for how a structured note will behave. Henry observes, "Being a disciplined, systematic manager applies not just to investing but to product development such as the structure of a note or swap."

JWH also has a number of proprietary trading accounts testing new ideas and methodologies. The firm is also doing preliminary work and trading in equity markets for defensive programs that can serve as an alternative to long-only investing. Currently, JWH does not allocate to other managers, but products along these lines are being developed.

LONG-TERM TREND FOLLOWER AND DIVERGENCE TRADER.

If one theme summarizes Henry's philosophy, it is the knowledge that one cannot predict anything.

Henry is a long-term trend follower. His philosophy is based on the