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Lazard eyes credit opportunities with “early mover” long/short UCITS launch
Lazard Asset Management has unveiled a new long/short credit UCITS hedge fund which trades investment grade, crossover, and high-yield bonds in Europe and North America.
The Lazard Coherence Credit Alternative Fund replicates the original Lazard Coherence Long/Short Credit strategy, which launched in August 2012. The strategy’s “early mover” portfolio is built around Lazard’s view that fixed income markets are an extension of equity markets, and makes investments ahead of yield spread and price changes which are driven by earnings and credit ratings momentum.
Managed by Sal Naro, Vincent Mistretta, Michael Cannon and Sanjay Aiyar, the fund looks to generate absolute returns and maintain capital preservation, and will aim to curb interest rate volatility through hedging and other risk management processes.
The strategy employs a top-down macro view to zero in on relative value opportunities across and within certain credit sectors, which is then fused with a proprietary, multi-factor model that systematically identifies specific long and short opportunities, Lazard said.
Allocations in the portfolio are grouped by their expected return drivers – core holding, event driven, relative value and so on – and are actively managed based on potential market opportunities and the macro landscape.
“Persistently low interest rates have led to a surge in corporate debt issuance. Yet the changing economic environment and eventual withdrawal of central bank stimulus could lead to significant credit migration, causing challenges for investors that have moved down the ratings spectrum in search of yield,” said Sal Naro, managing director and portfolio manager on the Lazard Coherence team.
“By viewing bonds as an extension of equity markets, rather than adopting a traditional fixed income approach, we seek to identify sector and credit spread migration early, leading to greater return potential, while looking to limit the tail risk for investors.”
The original Coherence Long/Short Credit Strategy has recorded an annualised return of around 8 per cent net of fees since inception, with a realisable Sharpe Ratio in excess of 1.5.
The new launch will further expand Lazard’s Alternative Investment Platform, which currently manages about USD3.9 billion in client assets.
Lazard Asset Management manages a range of equity, fixed income, and alternative investments globally. Together with affiliated asset management companies in the Lazard Group, the firm manages some USD272.6 billion in client assets.
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics UCITs Long-short investing Investing in Hedge FundsManagement Companies in Focus 2021
The management company concept was first created to provide assurance of good governance and control with self-managed fund entities and vehicles. As funds proliferated and as the industry matured, the management company concept was born as an entity that would provide the necessary governance, oversight and services.
Since that time, the industry has matured with an increased move towards the provision and use of third-party ManCo services and the establishment of ‘Super ManCos’ – a service offering comprising both UCITS and AIFMD funds.
This report looks at developments in third-party services, Super ManCos, and drivers and challenges in different jurisdictions to consider the current situation of the market and future opportunities.
Regulation pushes Irish ManCo adoption
In recent years, the Irish fund market has struggled under a burden of regulation that would break a lesser jurisdiction. From regulatory reporting to UCITS V, and from CP86 to CP140, the need for regulatory compliance across the board has resulted in increasing interest in and take-up off third-party management company (ManCo) offerings.
Until 2017, most people setting up UCITS funds in Ireland used the self-managed fund (SMIC) model. However, there was a whole stream of continuing regulation – UCITS IV, UCITS V, AIFMD, EMIR, FATCA, CRS, the introduction of Central Bank online reporting systems, a huge increase in in regulatory reporting, PRIIPs, KIIDs, EMT/EPT, MiFID II – with none of the traditional delegates in the SMIC structure responsible for managing that regulation.
According to Patrick Robinson, Managing Director at MJ Hudson Bridge in Ireland: “This really started to lead to the growth in third party management companies in Ireland.”
While some firms set up third party management companies early on, MJ Hudson Bridge came later to the market with its ManCo, launching its first funds in 2017 when people were then starting to look at what management companies could offer in terms of a more effective operating model or an outsourced operating model.
Robinson explains: “Shortly after CP86 started, the Brexit referendum came along and the number of asset managers looking to set up their own management companies in Ireland to provide a post-Brexit EU distribution solution gave regulators an opportunity to push increased local substance expectations very quickly. The push for increased local substance has continued post-Brexit, resulting in the traditional self-managed funds appointing third party management companies.”
Of course, there is still an appetite for internal ManCos for those who want an EU licence, whether for EU distribution or individual account management, and scale still matters, with most of the top tier managers who required an EU contingency now having set up with their own regulated firms somewhere within the EU.
However, many managers are still waiting for final clarity on post-Brexit UK access to the EU and decisions on financial services equivalence before making long-term decisions on setting up their own EU licences..
“They’re looking at all the workaround solutions in the interim, including MiFID hosting licences including in jurisdictions such as Malta and Cyprus, at how robust those are from a regulatory standpoint and from their investors’ viewpoint, and waiting until UK financial services access is clear before making decisions about setting up their own licence within the EU,” Robinson says.
Robinson believes that, when the current regulatory change in Ireland settles somewhat, service will become the key differentiator between third-party ManCo offerings, with areas such as ESG a particular area for expansion.
“We’re looking at assisting our managers with the real implementation of ESG into their investment processes, investment due diligence and how investment managers are assessing the underlying companies they are investing in for ESG. Our specialist ESG consultancy business at MJ Hudson has been providing ESG services to asset managers for over 15 years and has been a huge benefit to a number of our clients in developing real ESG into their investment strategies and policies,” he says.
“The next stages of growth and opportunity in management companies will be about breadth of service and that one-stop shop outsource model,” Robinson concludes.
Patrick Robinson
Managing Director (Ireland), AIFM and ManCo
Services at MJ Hudson Bridge
Patrick Robinson has over 20 years experience in the asset management and funds services industry. Patrick began working for MJ Hudson Bridge in October 2009.
Patrick has an in-depth knowledge of UCITS and AIFM requirements and has project managed a number of UCITS Management Company /AIFM authorisations in Ireland and has provided assistance on numerous fund structuring /product development projects. He has established the risk, compliance and operational infrastructures of a number of asset management firms.
Like this article? Sign up to our free newsletter Author Profile Related Topics ESG & Responsible Investing UCITsMan FRM: Equity and macro hedge funds can capitalise on climate focus
With the COP26 climate summit underway in Glasgow, equity long/short hedge funds can capitalise on the renewed focus on sustainability, while climate change and energy price volatility heralds opportunities for certain macro managers.
Hedge funds may have endured a bumpy patch in the third quarter, but Man FRM’s chief investment officer Jens Foehrenbach is upbeat on the sector’s Q4 prospects.
Man FRM’s Q4 Quarterly Outlook said the heightened focus on environmental, social and governance (ESG) factors heralds fresh investment opportunities for equity long/short hedge fund strategies, which have suffered lately as a result of crowded long trades - particularly in technology and growth stocks that often struggle in rising interest rate environments.
Investors and consumers alike are now forcing companies to re-evaluate their environmental and social impacts.
As a result, “thematic funds will naturally benefit from a clear divide in “winners” and “losers” of the energy transition and/or move towards carbon neutrality,” Foehrenbach observed, noting that hedge funds can capitalise on this distinction.
Elsewhere, the potential for alpha generation in Chinese equities may prove “limited in the short term” thanks to the impact of the Evergrande debt crisis on stock market volatility there.
But healthcare stocks stand to gain from structural and secular tailwinds, Man FRM – the funds-of-funds unit London-headquartered, publicly-traded global asset management giant Man Group – noted.
“An aging population and increasing wealth in emerging markets should boost demand for drugs, treatments, and medical care, whereas technological innovation could create new opportunities across the sector,” the outlook said.
Elsewhere, Man FRM remains positive on discretionary macro and event arbitrage strategies, neutral on credit long/short, and a negative distressed credit.
On macro, Foehrenbach suggested managers can generate returns from the transition to tighter monetary policy and asset class volatility stemming from inflation.
“Macro managers have proven to be additive to portfolios as they have the potential to add convexity. We are focused on sourcing managers with a regionally unconstrained mandate,” he said.
He added that the quantitative macro space stands to gain from the “exceptional opportunities” in European gas and power price volatility in the immediate term while, longer term, the importance of inflation expectations, climate change and China’s reopening will be drivers of returns and investment opportunities.
In relative value-focused hedge funds, event driven merger arbitrage managers continue to benefit from a strong flow of deal activity across all regions, especially large cap mergers which can absorb a lot of arbitrage capital and keep spreads wider, he added.
Reflecting on the potential risk of stagflation, the note indicated, convertible managers could benefit from higher underlying stock volatility, while structured credit could be squeezed by weakening collateral values and higher borrowing costs. Certain equity long/short managers would struggle unless they are “nimble and factor aware”, while trend followers would likely struggle in the transition period from inflation to stagflation.
Foehrenbach added: “The increasing risk of a significantly more challenging market backdrop driven by persistent inflation has led us to adjust portfolios by reducing risks where necessary, while concentrating on hedge fund strategies that offer the best opportunities in the coming quarters.”
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics ESG & Responsible InvestingSubstance over style: ManCos look to the future
By Kristina West – The management company concept was first created to provide assurance of good governance and control with self-managed fund entities and vehicles. As funds proliferated and as the industry matured, the management company concept was born as an entity that would provide the necessary governance, oversight and services.
Many firms took the decision at this time to create their own, internal management company; but since that time, the industry has seen greater development and detail of the rules, particularly with the focus on liquidity and sustainability, and expectations have grown, leading to the establishment of third-party ManCos servicing UCITS funds, AIFMs, or – more recently – both.
Internal or external?
There are still compelling arguments for both inhouse and external ManCos, depending on the stage or situation of the firm; for example, those who want an EU European licence, whether for European distribution or individual account management, may wish to set up their own ManCo, while most of the top tier managers who required an EU contingency are now set up with their own regulated firms somewhere within the EU.
However, for many, the costs of market entry are high, so firms need to consider how long they will be in the market, whether the costs are too prohibitive, and if the size of the investment is justified.
Craig Blair, VP, General Manager, Board Member and Conducting Officer at Franklin Templeton, also flags risk appetite as an issue. “You have to have substance and specialisms in the domicile that the management companies are in.”
The benefits of using a third-party provider can include lower financial outlay for new market entrants, time to market, and going into a new area of investment where an experienced third-party provider knows the asset classes and can provide good governance.
Super ManCos
Key services offered by third-party providers revolve principally around the six key management functions required by legislation, either UCITS or AIFMD, with supervision of delegates, risk management oversight, and investor management oversight at their core.
However, more recently, some third-party providers have begun to offer services in both UCITS and AIFMD funds. While the capital requirements, reporting and regulation structures may be different between the two, third-party ManCos have seen a gap in the market and are willing to cater to demand from large and sophisticated clients.
The battle of the jurisdictions
Luxembourg remains at the head of the European market for fund administration and related services, with more than EUR5.3 trillion in net assets under management in regulated funds. And funds domiciled in Luxembourg pay lower taxes on their funds under management than in other EU nations, an advantage which helps investors to benefit from a larger slice of the payouts.
The Association of the Luxembourg Funds Industry (ALFI) has a dedicated Management Company Technical Committee, with more than 200 leading industry experts, who have combined to form working groups looking at issues including due diligence on ManCos and service providers, marketing and distribution, and ESG and EU SFDR requirements.
Waystone is currently seeing client preference for Luxembourg over Ireland for private debt and illiquid asserts, as Luxembourg has built up a brand awareness and expertise that Ireland has not yet achieved.
However, David Morrissey, Global Head of Client Solutions at Waystone, believes that the regulatory framework and market support will evolve. He says: “Luxembourg has the SCSP which is basically a GP-LP investment structure. Ireland earlier this year launched the AILP, which is a very innovative new structure, but unfortunately it hasn’t gained the market traction we’d like to see at this stage. It just needs a bit more time.”
Yet third-party ManCos have a significant presence in the Irish market too. Patrick Robinson, Managing Director (Ireland), AIFM and ManCo Services at MJ Hudson Bridge in Ireland, points to the massive burden of regulation under which Ireland has been operating for years as a key driver, but also believes that service will become the key differentiator between service providers going forwards, with areas such as ESG ripe for expansion.
Creating opportunities
With increasing demand for services from clients and a continued focus from regulators across the world, it seems the third-party ManCo structure has never been more important. And with opportunities to follow clients into new markets and passport services into ever-more jurisdictions, the future is bright.
Like this article? Sign up to our free newsletter Author Profile Related Topics Special ReportsFrom pole to pole: Super ManCo Waystone offers global support
Until five years ago, there were still some perceived benefits for firms to build an in-house management company (ManCo), in terms of control and the assumption that using a third party might be perceived differently by investors. But with these concerns largely allayed, the rise of the third-party ManCo – and, indeed, what has been termed the ‘Super ManCo’, a firm that supports both UCITS and AIFs – seems assured.
Waystone may have only officially launched in March 2021, but the merger of three companies – DMS, MontLake, and MDO – under one banner has brought together experience plus geographical and asset coverage to create a Super ManCo that offers scale, substance, and expertise to its clients. Operating principally in Luxembourg and Ireland, Waystone also has a Cayman Islands operation, has passported its ManCo into France and Spain and has a UK ACD, its equivalent of a ManCo.
David Morrissey, Global Head of Client Solutions at Waystone, says: “When you look at the scale and substance at each of the management companies, together with our value-added services, it really is a significant differentiator in the market.”
Key services offered by third-party providers revolve principally around the six key management functions required by legislation, for either UCITS or AIFMD investment products, with supervision of delegates, operational risk management, and investment management oversight at their core.
“We tell our clients they should really view us as an extension of their own internal teams, rather than the firm having to consider and worry about scaling up and allocating resources to the business”, Morrissey says.”
A third-party ManCo must also act agnostically in different jurisdictions to truly support service its clients. “We want to help our clients raise assets in their core markets,” Morrissey says. “Whether they need a Luxembourg fund, an Irish fund, a Spanish fund or a French fund, we offer them the regulatory support that allows them to launch a fund, which in turn, allows them to raise assets.”
Waystone is currently seeing client preference for Luxembourg over Ireland for private debt and illiquid asserts, as Luxembourg has built up a brand awareness and expertise that Ireland has not yet achieved, though Morrissey believes that the regulatory framework and market support will evolve.
He says: “Luxembourg has the SCSP which is a GP-LP investment structure. Earlier this year Ireland launched the Irish Limited Partnership (ILP Structure), which has been an initiative of the Irish Funds Industry for over 10 years, but unfortunately it hasn’t gained the market traction that the Irish industry would like to see at this stage.”
Waystone is well-placed for any development of jurisdictions and instruments in which its clients have an interest, with recent client requests including support in the Cayman Islands, the US and Japan.
“We are in the process of rolling out the equivalent of a ManCo in Singapore to support our clients, whilst we also passported our management company to Japan to assist one of our clients raise assets and distribute their funds locally. Ultimately we’re focused on helping our clients succeed,” Morrissey says.
David Morrissey
Global Head of Client Solutions
David Morrissey is Global Head of Client Solutions at Waystone and is based in Dublin. David has over 25 years of experience in product development and client service covering mutual funds, UCITS and non-UCITS, offshore hedge funds and private equity funds in the US, Europe, the Middle East and Asia. At Waystone, David uses his vast experience to assist clients with structuring and developing products in their chosen market. Leading a global Client Solutions Team, David has product expertise in key jurisdictions that include,the Cayman Islands, Europe, the USand the Asia-Pacific region.
Like this article? Sign up to our free newsletter Author Profile Related Topics UCITs InvestmentsLeading the pack: Luxembourg extends its reputation as a thought leader
The Association of the Luxembourg Fund Industry (ALFI), the industry body for promoting Luxembourg’s fund sector internationally, has witnessed the establishment and growth of ManCos across many years.
The history of ManCos
The fund industry grew primarily through the creation of self-managed UCITS fund entities. As funds proliferated and as the industry matured, the management company concept was born as an entity that would provide the necessary delegated services, governance and oversight in a more scalable way. The management company concept provided greater consistency and assurance of good governance and internal control.
Craig Blair (pictured), Managing Director and Conducting Officer at Franklin Templeton International Services and Co-Chair of the Management Company Technical Committee at ALFI, says: “This ability to be scalable allowed greater depth of expertise to develop in key areas such as portfolio management oversight, valuation and internal control functions such as risk management, compliance and internal audit. Bringing that skill and expertise together in a more efficient way meant you could develop greater value around good governance.”
The industry has since matured and seen greater development of regulations, particularly with the focus on topics such as liquidity, delegation oversight and more recently on sustainability. “This caused us to really think about how we structure ourselves, how to have appropriate positions and substance in place, organisational requirements, and policies and procedures are defined to a much greater level than before,” Blair says.
Internal or external?
There are still compelling arguments for both inhouse and external ManCos for asset managers, depending on the firm. For example, the costs of market entry are quite high in terms of hiring the required substance and capital requirements, so firms need to consider the financial outlay and ROI if they set up their own structure.
Blair asks: “Is it a long-term committed strategy, or are you going in with more of a tactical approach with a limited number of products and therefore will the costs be too prohibitive? Then you’d possibly be thinking about that third party model, perhaps even as a transitionary arrangement for the first three to five years until you gain critical mass.”
Even existing firms in the market entering new asset classes or areas of investment may want to consider whether they build organically or whether they utilise a third party who have experience already in those asset classes.
In terms of the internal management company, he flags risk appetite as a consideration for those asset managers who want to have their own structures. “You have to have requisite substance, control and decision making in the domicile that the management company is in, but the firm can leverage the infrastructure and global expertise to an extent within the wider organisation.”
Developing thought leadership
To consider the optimisation of the ManCo market, ALFI set up the management company technical committee with working groups looking at issues including due diligence on ManCos and service providers, marketing and distribution, and ESG and EU SFDR requirements.
“We’re also developing an investment management oversight forum,” Blair says. “Investment management oversight is a key requirement, but I don’t think there’s been enough of a broad-based industry discussion about best practices. We’re trying to produce some practicable guidance around that.”
He concludes: “In Luxembourg, the industry needs to continue to deliver value to investors, whilst ensuring the greater levels of investor protection. We are well placed to be a thought leader on topics such as digitalisation and sustainability.”
Craig Blair
Managing Director and Conducting Officer at Franklin Templeton International Services and Co-Chair of the Management Company Technical Committee at ALFI
Craig Blair is General Manager, Conducting Officer, and Board Member of Franklin Templeton International Services S.à.r.l. Blair has worked in the global financial services industry for over 16 years, holding various responsibilities in the Luxembourg, UK, Irish, Eastern European and Brazilian asset management industries. As Head of FTIS, he is responsible for the day-to-day operations of the corporate entity and EU-wide branch structure. He currently also sits on the Board of ALFI and co-chairs the ALFI Management Company Technical Committee.
Like this article? Sign up to our free newsletter Author Profile Related Topics ESG & Responsible Investing Legal & RegulationSingapore: the ‘go to’ domicile for Asia Pacific expansion
By Kristina West – Singapore continues to make significant efforts to further promote the appeal of the Lion City to hedge funds, private equity and other alternative investment managers, and it seems that its strategy is working. In 2020, Singapore’s asset management industry grew strongly, with assets under management (AuM) rising more than 17 per cent overall and at 31 per cent year-on-year in the alternatives sector. Venture capital and private equity continue to be strong performers within this segment.
Singapore provides a key gateway for global investment managers seeking to raise assets and invest across Asia Pacific’s financial markets and with a significant family office presence, Singapore also represents an important fundraising hub for those seeking to expand in the region.
A game-changing structure
Last year, the unveiling of the Variable Capital Companies (VCC) Act was widely seen in the investment industry as a potential game-changer. In addition to facilitating increasingly attractive and efficient structures for Asia-centric hedge fund strategies and other regional and global alternative investment strategies, the new investment fund framework is expected to have major employment benefits for Singapore’s financial services sector and beyond.
The VCC provides the fund management industry with a new corporate structure tailored for investment funds, offering them greater operational flexibility and cost savings. “Fund managers using the VCC framework benefit from its flexible capital structure, effective segregation of assets and liabilities, and ability to cater to open and close-ended funds,” says Gillian Tan, Assistant Managing Director (Development & International), Monetary Authority of Singapore (MAS).
Some fund managers have even redomiciled their existing funds to Singapore, including from Cayman Islands, Bahamas, Mauritius and Cook Islands. “This demonstrates the global appeal of VCC to fund managers who seek to enhance the substance of their activities locally, and to maximise operational efficiencies and cost savings from co-locating their fund management and fund domiciliation activities in Singapore,” Tan adds.
Its successful launch has been a catalyst for growth, but also shows the need for sustainable digital capabilities and regulatory developments to grow Singapore as a digital asset hub. Martin O’Regan, Managing Director at Solas, says: “The growing sophistication of funds will require directors to demonstrate skills in risk, strategy oversight, compliance and investment processes.”
A new asset management ecosystem
While the VCC has been a key development, it is not the only one.
To underscore how the island views its position within the global funds industry, its financial regulator, MAS, recently announced a new partnership between it and the private sector to burnish Singapore’s reputation as a leading full-service asset management and fund domiciliation hub.
Known as the Singapore Funds Industry Group (SFIG), its mission is to bring together key players across the entire asset management value chain, including not just fund managers but also lawyers, tax advisors, fund administrators and corporate directors. These service providers work closely with fund managers to support a fund’s operations throughout its life cycle in areas such as fund structuring and set-up, fund administration, regulatory reporting, tax advisory, and fiduciary oversight.
Tan comments: “We encourage the fund management and administration industry to tap on SFIG to help ideate, test and implement as it works on digital utilities and infrastructure, provide feedback and insights on regulatory, legal and tax frameworks conducive to Singapore’s development as a funds hub, and contribute content and attend its training and engagement sessions.”
Singapore in the green lane
With the UN’s COP26 summit approaching, Singapore is positioning itself to play a key role as the financial services hub in Asia. Ashmita Chhabra, Managing Director at Apex Group, comments: “Pressure is mounting on the financial sector, not least from the regulators.”
MAS has released a sustainability report to prompt development of a green financial ecosystem and is fostering the development of a green bond market, with its Sustainable Bond Grant Scheme encouraging the issuance of ESG-compliant bonds in Singapore.
Further, a Green Industry Taskforce has been convened, proposing a taxonomy and launching an ERM handbook among other measures to promote ESG considerations in the Singapore markets, while MAS is looking to set out its expectations on disclosure standards that must be met by retail funds in Singapore early in 2022.
Armin P. Choksey, Partner, Asian Investment Fund Centre Leader at PwC Singapore, says: “The road to developing a global ESG standard has still some time to go but the journey has already begun with one initiative at a time.”
Secondary market grows in APac
Meanwhile, despite relatively small numbers of five to 10 per cent of global volume, the Singapore secondaries market continues to grow as such transactions become more ‘mainstream’, and there is cause for further optimism.
Tom Lin, Partner, and Morgan Shubin, Senior Associate at Clifford Chance, comment: “Our view is that, with the benefit of deal trends and sentiment from global transactions, the Singapore ecosystem is particularly well set up to support significant growth of the secondary strategy.”
A vision of the future
It feels like exciting times lie ahead for the Lion City, both for fund managers and service providers alike. Imagining how the industry will develop from 2021-2035, Mark Voumard, Founder and CEO at Gordian Capital, predicts a global economic shift to Asia; strong growth as an asset management and fund domiciliation hub; and the introduction of its own digital currency.
This report will shine a light on all those looking to get a better understanding of Singapore’s virtues, and its myriad benefits, and why it is fast becoming the ‘go to’ option for Asia Pacific expansion.
Like this article? Sign up to our free newsletter Related Topics Special ReportsSingapore in Focus 2021
Singapore continues to make significant efforts to further promote the appeal of the Lion City to hedge funds, private equity and other alternative investment managers, and it seems that its strategy is working. Last year’s unveiling of the Variable Capital Companies (VCC) Act has widely been seen in the investment industry as a game-changer, while Singapore’s financial regulator, MAS, recently announced a new partnership between it and the private sector to burnish Singapore’s reputation as a leading full-service asset management and fund domiciliation hub.
This report delves into the impact of these measures on Singapore’s burgeoning reputation as the financial hub for Asia, shining a light on its role in creating a sustainable ecosystem, the growth of its secondaries market, and its position as an asset management and fund domiciliation hub.
Singapore the Asset Management Centre of the Future
By Mark Voumard – The genesis of Singapore’s asset management industry development: 2021 – 2035
It’s 2035 and Jane Lee, a resort hotel executive in Singapore is planning to invest in one hedge fund and two mutual funds, all Variable Capital Company’s (VCC) managed by asset managers based in Singapore, Asia’s largest asset management centre, fund domiciliation hub and private banking nexus. Her AI digital PA navigates to her personal, cloud based, financial portal reviewing the latest return data and scans her personal, long term financial plan and goals, leading to approval, and Jane is ready to invest. Her AI program using U-Reg, an advanced KYC/AML software, locks into each manager’s online application and completes each subscription form in 30 seconds, supplying certified true copies with a digital watermark of her passport, proof of address and proof of Accredited Investor status. Each fund manager’s AI system check and verify all the information resulting in approval within five minutes, with Jane’s AI PA remitting funds in Singapore’s digital currency, the SG-ED.
Global economic shift to Asia
In 2021, a Regional Comprehensive Economic Partnership (RCEP) pact (and the world’s largest free trade agreement) was signed, focusing on reducing trade barriers in Asia. By 2030, it was adding USD220 billion a year to world incomes and USD560 billion to world trade. In 2031, China surpassed the US as the world’s largest economy and by 2033, 42 per cent of world GDP and 36 per cent of global consumer spending was generated in Asia.
The period 2022 to 2029, saw technological innovation and the rapid adoption of technology by governments in Asia; in particular, in Singapore, where the city state ramped up subsidies and multiyear training of the local workforce, to truly transform itself into a knowledge economy. The adoption of digital tools and processes boosted productivity growth and unleashed a wave of innovations across many domestic sectors including finance and asset management.
Strong growth as an asset management and fund domiciliation hub
By 2035, global Assets Under Management (AuM) grew from USD89 trillion in 2021 to USD240 trillion (CAGR 6.84 per cent). By 2035, AuM across the asset management industry in Singapore rose from USD3.5 trillion to USD20 trillion (CAGR 14.34 per cent), second globally as a fund hub, only to Luxembourg USD22 trillion (CAGR 11.27 per cent), followed by Shanghai with USD15 trillion. Whilst investment vehicles established and operated in Luxembourg and Singapore are used to make regional (pan-EU and pan-Asian) investments respectively, in the case of Shanghai, most of the capital and assets are domestic, not cross border. In the region, both Australia and Japan have built large pools of domestic capital in domestic vehicles but with a focus still on primarily investing in domestic assets.
Singapore’s growth spurt began in the early 2020s with the launch of the VCC in January 2020. Singapore was already one of the leading asset management and private wealth centres in Asia experiencing double digit CAGR in AuM when it launched the VCC to bring funds onshore where they could be serviced locally and to win a percentage of the global fund domiciliation business.
Prior to the VCC launch, 85 per cent of the money managed from Singapore was in Cayman structures and 4 per cent in Luxembourg structures. 500 VCCs were launched in the first two years (during the first Covid pandemic) and as of August 2035 there are 7,000 VCCs with 70 per cent of the money managed from Singapore now in Singapore domiciled structures. Globally, the trend to onshoring continued through the 2020s, boosted in part by the rollout of the global minimum tax in 2023 that was extended to the financial industry, hitherto exempt, in 2028. Whilst some US-based managers continue to use Cayman and increasingly Delaware vehicles, the rest of the world, over time, shifted to either Luxembourg, despite the partial break-up of the EU in 2027, for European investments or Singapore for Asian investments.
Between 2021 and 2035, Singapore’s share as a percentage of global AuM increased from 3 per cent to approximately 9 per cent and the number of licensed asset managers based in Singapore increased from 1,050 to 2,950. By 2028, the Asian Regional Fund Passport (ARFP), a cross border, online system allowing residents of 15 countries across Asia to access funds domiciled and or managed in each of the other 14 countries, had overcome prior obstacles and was in full swing. By 2029, Asia accounted for 75 per cent of all the venture finance in the world versus 3 per cent in 2005. With a focus on political stability, the rule of law and the strongest IP rights in Asia, Singapore became the regional headquarters for many of the Asian recipients of this wave of money.
Use of AI by hedge funds
XAI or Explainable Artificial Intelligence (a term created by DARPA) allows humans to understand how and why AI generates a specific set of results and allows managers to be able to explain to investors exactly how alpha is being generated. Singapore bet the house on this technology providing significant government funding for hedge funds utilising XAI, leading to Singapore becoming a world-leading XAI hub.
Introduction of digital currency
The MAS issued its own digital currency, the SG-ED in 2025, which further cemented Singapore’s position as a centre for crypto and blockchain investing and trading. That said, as more and more central banks issued their own digital currencies (CBDCs) with China leading the charge in 2022 issuing an ‘e-yuan’ and the US belatedly issuing its own USD-ED in 2028, the growth of independent crypto currencies such as Bitcoin fell dramatically. The use of the SG-ED prompted previously unbanked assets from across Asia to shift into its rigorous financial system and improved speed, cost, and transparency of cross-border payments.
The talent bottleneck
The knowledge economy created tremendous demand for skilled workers with the numbers in the financial industry jumping to 700,000 in 2034 from 200,000 in 2014 and the finance industry contributed to 48 per cent of Singapore’s GDP in 2034 versus 19 per cent in 2021. The path was not easy with a talent bottleneck developing in the asset management industry between 2020 and 2022. A subsequent significant increase in the number of global asset managers basing themselves in Singapore, bringing with them international expertise, beneficial for knowledge transfer and upskilling of the local workforce, combined with strong support by the MAS for academic programs and training provided by the industry, resulted in a significant expansion of financially trained workers.
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital Assets Technology & software solutionsSingapore: Addressing climate change and sustainability
By Ashmita Chhabra – With the United Nation’s COP 26 summit approaching, the need to do more to address climate chance is once again in focus. As a key financial services hub in Asia, Singapore has an important role in the development and integration of sustainable finance practices into the real economy. The capital market’s ability to drive meaningful change by encouraging disclosure, stakeholder engagement and innovative green financing initiatives are all part of Singapore’s commitment.
Developing a sustainable ecosystem
The Monetary Authority of Singapore (MAS) intends to make sustainable finance a defining feature in Singapore’s role as a global financial centre. Its inaugural sustainability report, the first of its kind by a central bank in Asia, outlines plan to strengthen and develop a green finance ecosystem, build a climate-resilient reserves portfolio, while reducing its own carbon footprint. Those efforts include testing the climate resilience of its official reserve investments and deploying USD1.8 billion to five asset managers under its Green Investment Programme (GIP) to manage new mandates focused on climate change and the environment.
The investment management industry has also been rapidly developing policies and framework to meet demand and major state-led institutional investors have followed global trends in ESG adoption, with themes such as carbon transition now core to investment decision managing. While much of the disclosure requirements remains voluntary, MAS expects financial institutions operating in the city-state to make climate-related disclosures from June 2022, in line with international frameworks, including the TCFD recommendations.
The EU introduced the first part of its Sustainable Finance Disclosure Regulation in March and plans to have in place more stringent measures next year requiring asset managers investing in the region to produce comprehensive reports, with quantitative ESG metrics around their investments, including carbon emission data points. Regulators in the US and the UK are set to push through similar rules.
Preparing to deliver
Having the right tools to provide accurate and meaningful qualitative and quantitative data, like through the use of Apex Group’s new Carbon Footprint Assessment solution, will be key to financial sector firms delivering on those regulatory and fiduciary demands. Only by obtaining a clear picture of their ESG performance – both as a business and across their portfolio companies – can they create an action plan that helps ensure they play their part in building a more sustainable future.
Recent research by Apex Group shows that many asset managers in Singapore recognise this responsibility; however, the commitment to act leaves room for improvement. 94 per cent of private equity firms in Singapore agreed that climate change is an urgent issue, with 84 per cent agreeing they and their investments should take greater responsibility. Yet less than half of respondents (40 per cent) measuring their own carbon footprint, and only 32 per cent that of their investments.
Encouragingly, however, all the private equity firms from Singapore that took part in the study said they have plans to be carbon neutral, with 44 per cent already having a well-defined process underway, and 56 per cent planning to do so in the future. Part of that commitment is down to the fact that pressure is mounting on the financial sector, not least from regulators.
Like this article? Sign up to our free newsletter Author Profile Related Topics ESG & Responsible InvestingThe global secondaries market: What Singapore-based sponsors can learn
By Tom Lin and Morgan Shubin, Clifford Chance – It has become fashionable to say that secondary transactions are now ‘mainstream’, with some market participants pointing to the flourishing GP-led segment of the market as a ‘fourth leg’ option for liquidity alongside conventional exit routes for PE assets (i.e. sale process, IPO or recapitalisation). That might not be necessarily a perfect characterisation, though we suspect it might be to a degree with some nuance. However you might characterise it, the growth in deal activity (market commentators expect transaction value to exceed USD100 billion for the first time in 2021), extraordinary fundraising, the concerted expansion of global managers into the strategy (whether through acquiring established platforms or team build-outs) all points toward one direction of travel: bigger, more competitive and more complex.
A growing market
The pandemic has supercharged the growth in transactions led by the sponsor, or GP-led secondaries to use jargon, involving single assets or concentrated portfolios with a crown jewel. This was driven in part by the outlook of an uncertain exit environment as the macroeconomic shock of the pandemic first took hold, coupled with (and giving way to) a recalibration of sponsors’ (and investors’) expectations on value and growth potential resulting from the market dislocation. Tailwinds driving the accelerated growth potential of certain asset classes resulted in GPs doubling down, whilst headwinds facing other asset classes resulted in GPs looking to extend holds on assets with strong fundamentals to undertake strategic pivoting.
Our perspective at Clifford Chance is perhaps unique in that our ‘boots on the ground’ capital solutions team in Singapore is lucky enough to run deals across European and APAC opportunities. Whilst the market opportunity in APAC has historically been small by comparison (it’s commonly accepted that APAC represents around 5-10 per cent of global secondaries volume), there is cause for optimism in regional activity growth driven by a number of factors. A slowdown in primaries, a backlog of transactions disrupted by the pandemic, and the opportunity for international investors to use a secondary strategy to access mature assets in the region as a means of diversification, are commonly recognised as such factors. In this context, supported by a strong advisory community on the ground in Singapore and elsewhere in the region, more proven GPs are reviewing assets through the secondaries lens which, empirically, has resulted in higher quality GPs bringing deals to the market during 2021.
Learning the lessons
Singapore-based sponsors thinking about entering the secondaries market will be in the privileged position of being able to build on the lessons learned in the US and European secondaries market, allowing for swifter identification of key issues and an ability to refer to ‘market practice’ where relevant and helpful. For example, an issue that has received a lot of attention in global secondaries transactions is how conflicts of interest are managed and, for some market participants, the increasingly robust approach that GPs are taking towards conflicts management. In a GP-led secondary transaction, the sponsor sits on both sides of the trade. One thing we have observed as perhaps the biggest issue in the whole area is validating valuations and LP agitation about the extent to which value was really right. We think LPs are increasingly sceptical about fairness opinions (often commissioned by the LPAC or advisory committee of a fund, around the process of conflict management rather than the actual proposed price) and, as a consequence (and certainly for the concentrated or single-asset deals), they expect to see more market-testing of value with lead secondary buyers being bidders in a market auction akin to a traditional M&A buyout.
In relation to deal terms, careful consideration must be given to the manager’s duties to each of the buying and the selling entities, and how best to evidence the mitigation of conflicts of interest to the investors in each vehicle. This may be particularly acute where a sponsor is asking for a staple, or when bringing in their current flagship fund to co-invest alongside the secondary vehicle (a trend we have seen emerge as the equity cheques required now routinely exceed what can be put together with only one or two lead underwriters of a deal – not to mention the ‘strong buy signal’ that comes about with a sponsor’s flagship fund coming into a deal). What should the liability package look like and does that pass muster as a reasonable allocation of risk from a buy-side and a sell-side perspective? How do you price in an identified but unquantifiable risk (e.g. an ongoing tax or regulatory investigation)? How do you structure rollover election options when pressured to not offer a ‘status quo’ option for the existing investors by over-subscribed buy-side demand from lead secondary buyers?
Ready to go
Our view is that, with the benefit of deal trends and sentiment from global transactions, the Singapore ecosystem is particularly well set up (and we would say is more than ready) to support significant growth of the secondary strategy in the immediate timeframe for pan-APAC opportunities. The increasing availability of W&I insurance for these types of deals and access to the underwriting markets from Singapore-based brokers, is one example. As a financial hub, the private capital participants on the ground (experienced placement agents, counsel and lenders) in Singapore will support managers seeking to move into, or increase their presence in, this segment of the market. The key, as always, is proactively planning transactions with transparency in mind and adapting deal technology developed globally to local market conditions.
Like this article? Sign up to our free newsletter Author Profile Related Topics MarketsSimilarweb named Best Alternative Data Provider at Hedgeweek Americas Awards 2021
Similarweb, a digital intelligence company, has been named the Best Alternative Data Provider in the Hedgeweek Americas 2021 Awards. This is a first-time nomination and win for Similarweb, which earned the award for its Investor Intelligence service, launched in late 2018.
Compiled in conjunction with Bloomberg, the Hedgeweek Americas Awards recognise excellence among hedge fund managers and service providers in the Americas across a wide range of categories. For the service provider categories, short-listed firms were based on a widespread survey of more than 400 fund managers and other key industry participants. Voting for the eventual winners was then conducted through an online poll of Hedgeweek readers.
"We are thrilled to be recognised for the value that our digital intelligence brings to the investor community," says Ed Lavery, Director of Investor Intelligence at Similarweb. “Having visibility into the online presence and behaviour of private and public companies has never been more critical, and we are honored that Similarweb has been spotlighted as a leader in the hedge fund ecosystem.”
Similarweb's Investor Intelligence provides visibility and insights into the digital performance of private and public companies with a digital presence, covering over 100 million websites and 4.7 million apps across more than 210 industries and 190 countries. Similarweb Investor Intelligence has grown rapidly over the last three years, and is used by hundreds of investment funds in over 25 countries, quickly becoming one of the investment industry’s go-to sources of alternative data.
Like this article? Sign up to our free newsletter Author Profile Related Topics Awards Services Research & AnalyticsPreqin appoints new CEO
Preqin, a specialist in alternative assets data, tools, and insights, has appointed Christoph Knaack, currently the company's Chief Strategy & Product Officer, as CEO as of 1 January, 2022.
Knaack will focus on leading Preqin through its next growth phase, as the company moves toward serving its customers through the entire private market investment lifecycle — from fundraising and investor relations to deal origination, due diligence and portfolio monitoring.
From 2022, Preqin’s founder and current CEO, Mark O’Hare, will continue his active involvement as a member of Preqin’s Board of Directors, and as the company’s principal shareholder, supporting Preqin’s executive team with strategic guidance, as well as engaging with customers, partners and other stakeholders in the market.
Knaack joined Preqin in 2020. He has since served on Preqin’s Executive Committee where his in-depth understanding of the alternatives industry has proven invaluable in further advancing the company’s overall product and corporate strategy. Before he joined Preqin, Christoph was well-recognised in the investment world through his roles at hedge fund Davidson Kempner, private equity firm Kohlberg Kravis Roberts and in investment banking at Morgan Stanley.
Preqin currently supports more than 170,000 professionals by providing them with the most comprehensive alternative assets data and insights. The firm is currently going through a strong growth phase, with more than 1,000 staff across 14 offices globally. Under the leadership of Mark O’Hare, Preqin has become the global leader in alternative assets data, continuously focusing on innovation, technology and customer centricity.
In August 2021, Preqin took the next step in the company’s evolution with the acquisition of Colmore, a leading private markets technology, services and administration business. In October, Preqin launched major updates to its ESG Solutions, which provides private market participants with an indispensable 360-degree view of environmental, social, and governance (ESG) risk, impact and opportunity. Preqin has an ambitious product roadmap in place as the company continues to provide unmatched service and data-driven intelligence to its customers.
O’Hare says: “It is an exciting time for Preqin and the alternative assets industry in general, and as such it is a perfect time to transition to a dynamic new leader. Since he joined Preqin, Christoph has brought clarity and focus to our product and corporate strategy, with tremendous results. Thanks to his deep industry knowledge, customer focus and fresh perspective, Christoph is the right person to lead Preqin going forward — with the full support of the board, the executive committee and our amazing team across the globe.”
Knaack adds: “I am truly honoured to lead Preqin through its next phase of growth. Preqin is an incredible business and Mark’s vision in building it has truly changed the alternative assets industry. I want to thank Mark for his leadership over the years, for his personal mentorship and guidance, and for his and the board’s confidence in me. Private markets are evolving, and so is Preqin, and I am very excited about the opportunities ahead of us.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Moves & AppointmentsApex supports Absolute Investment Advisers as Convertible Arbitrage Fund exceeds USD500m
Absolute Investment Advisers (Absolute), a long-term client of the Apex Group (Apex), has closed its acquisition of Mohican Financial Management (Mohican).
Absolute is the fund adviser to the Absolute Convertible Arbitrage Fund (ARBIX) while Mohican Financial has been the Fund’s subadviser. The strategic transaction brings the two firms together.
Apex has worked with Absolute to support fund launches and provide ongoing fund services since its foundation in 2004. Absolute provides access to non-traditional investment strategies in mutual fund structures and continues to prove the value offered to investors by the asset class. In this case, the Absolute Convertible Arbitrage Fund (ARBIX) was launched on 14 August, 2017 with USD25 million in legacy assets and a 15-year track record. Fund assets under management have since grown to over USD525 million. Earlier this year ARBIX was named Lipper’s 2021 Best Alternative Equity Market Neutral Fund ranked one of 19 as of 11 March, 2021 for the three-year period.
“Convertible arbitrage is increasingly attractive to investors since it can complement either the fixed income or alternatives sleeve of a diversified portfolio. It may provide investors an opportunity for a moderate return with relatively low volatility, which is increasingly difficult to find in the current low interest rate environment. Convertible Arbitrage is, in our opinion, one of few strategies today that may consistently offer the potential for alpha and the team from Mohican has the experience, knowledge, and track record to execute on the opportunities present in the convertibles market,” explains Brian Hlidek, Managing Principal Sales & Marketing at Absolute.
Chris Koons, Head of Mutual Fund Services at Apex Group, says: “We truly value the collaborative relationship we have built with Absolute over the last 15 years, and are delighted to see such impressive growth with their latest product. We enjoy working on innovative products and our expertise and customized approach is well suited to Absolute’s service needs, in the past, present and future.”
David Faherty, General Counsel and CCO at Absolute, adds: “We have had a great working relationship with the Apex team who have consistently provided us with high quality fund administration, accounting, transfer agency and compliance services. Apex advice and support have played a vital role in the growth and success of ARBIX.”
Trading Technologies to be acquired by 7RIDGE
Trading Technologies International, (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, is to be acquired by 7RIDGE, a specialised growth equity firm invested in transformative technologies.
7RIDGE will fuel Trading Technologies’ organic growth and enable the firm to make targeted strategic acquisitions in the future. Cboe Global Markets, Inc (Cboe: CBOE) and Singapore Exchange (SGX), who are among the limited partners of the fund managed by 7RIDGE, have voiced their support of the transaction. Terms of the transaction, expected to close before year-end subject to regulatory approvals, have not been disclosed.
7RIDGE’s acquisition of Trading Technologies recognises the company’s 27-year leadership position in derivatives trading software, the value of its new state-of-the-art Software-as-a-Service (SaaS) platform, TT, and the talent of Trading Technologies’ global team, which spans 13 offices across four continents. Under this new ownership, Trading Technologies will remain independent and focused on delivering innovative, enterprise-wide solutions for institutional and professional trading.
Tim Geannopulos, Chairman of the Board and CEO of Trading Technologies, says: “We’ve been in search of the right strategic partner to help Trading Technologies achieve the tremendous potential of our pioneering new technology platform and accelerate the expansion of the business and product roadmap. Maintaining the firm’s independence will allow us to retain the incredible talent within our organisation and further strengthen our relationships as a valuable ally to our clients, our partners and the industry. We’re excited that 7RIDGE and its strategic limited partners including global exchanges Cboe and SGX believe in the future of our company and our vision of becoming the operating system of capital markets.”
Shortly after the acquisition closes, it is expected that Geannopulos will relinquish his current role while remaining actively engaged with the company. It is intended that Keith Todd will then be appointed CEO of TT to lead the company as it embarks on this next growth phase. Todd has over 20 years of industry leadership in financial markets technology with FFastFill, ION and currently KRM22.
Todd says: “Trading Technologies has built an exceptional global client base and great relationships with exchanges all over the world, as well as robust technology and a dedicated, experienced team. The firm has an aggressive roadmap for product and market expansion. I have long been a firm believer in the power of SaaS to deliver to clients better technology, greater cost savings and more efficient use of resources. I’m excited by this opportunity to lead TT into its next transformational phase with its outstanding new SaaS platform and the infusion of growth capital from 7RIDGE.”
Carsten Kengeter, Founder of 7RIDGE, says: “We thank TT’s shareholders for selecting us and look forward to accelerating the company’s dedicated contribution to its clients’ and users’ success. The firm has built the market-leading SaaS-based, modular, multi-tenant platform for professional derivatives trading that will bring new efficiencies and strength to the global financial system. Our own operating experience as well as that of our limited partners will strengthen TT’s position as the operating system of capital markets.”
TT was advised on the transaction by Broadhaven Capital Partners and Sullivan & Cromwell LLP.
Bitfinex launches multiple trading templates
Bitfinex, a digital token trading platform, has launched customisable trading templates, enabling each user to create their own unique trading experience.
Bitfinex customers can now tailor their trading portal according to their view on the market. Trading templates can be formulated to meet the specific requirements of a user, facilitating the execution of sophisticated trading strategies. Each user can choose between multiple widgets from a list of tools, including Trading Charts, Depth Charts and Bitfinex Pulse.
“We’re delighted to enable our growing user base to further tailor their trading experience according to their unique individual needs with these trading templates,” says Paolo Ardoino, CTO at Bitfinex. “As a platform to trade digital tokens, Bitfinex is in a class of its own and these new features bring to life the professional trading mindset.”
The exciting new feature allows users also to create multiple custom layouts, which can then be saved and used across various trading pairs, allowing access to faster analysis when trading.
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital AssetsITERAM makes double hire in alternatives team
ITERAM Capital SA, an independent Swiss alternative asset manager, has made two appointments to its alternative team.
ITERAM provides investors access to differentiated alternative investments with the potential to generate stable and consistent uncorrelated returns.
Manuel Garzelli, ITERAM’s CEO, says: "Moïra and Marouane will further enhance our alternative investment expertise and will be invaluable contributors to ITERAM’s growth ambition as well as serving our clients with best-in-class alternative investment solutions."
Marouane Daho joined ITERAM Capital in August 2021 as investment and research analyst within the team that oversees investments across hedge funds, alternative UCITS and private markets. He is responsible for analysing, selecting and monitoring alternative fund managers and actively participating and contributing with investment ideas at the investment committee. Daho reports to portfolio managers, Manuel Garzelli and Marc Sbeghen. Daho started his career at Credit Agricole Corporate & Investment Bank before joining Lyxor Asset Management as a Hedge Fund analyst in 2015. Prior to joining the firm, Daho was working as a hedge funds and private equity investment analyst and was a member of the investment committee at Lera Capital in Geneva. Daho graduated from NEOMA Business School with a Master's in Management and is a CAIA charterholder.
Moïra d’Anterroches joined earlier this year, in March 2021, and is responsible for the operational due diligence on alternative investments covering hedge funds, venture capital, private debt and liquid alternatives. D’Anterroches brings a deep knowledge of financial markets and financial products with expertise in quantitative and qualitative market risk analysis. She started her career in 2003 as investment risk analyst for asset-backed securities, corporate debt and credit derivatives at Natixis Capital Markets and Lehman Brothers in New York before joining Nestlé Capital in Vevey as investment risk manager. Most recently, d’Anterroches was an investment analytics consultant at Groupe Heller. D’Anterroches graduated with a Master’s of Arts in Mathematics of Finance from Columbia University, a Master’s in Economics from University of Geneva and is a FRM charterholder.
ITERAM has assets under management of USD450 million split across liquid and illiquid alternative strategies. The company offers investors innovative and high-quality alternative investment solutions that encompasses the full alternative spectrum from financing and direct investments to multi-manager portfolios, across private markets and hedge funds.
Like this article? Sign up to our free newsletter Author Profile Related Topics Moves & AppointmentsNew quant multi-manager AFBI secures strategic investment from New Holland Capital
AFBI, a new quantitative multi-manager platform led by former Tudor and Millennium portfolio manager Pierre-Yves Guillo, has secured an anchor investment from alternative investment seeder New Holland Capital.
Established in May this year, AFBI looks to generate uncorrelated returns across a diverse set of liquid quant strategies, using alternative data, proprietary portfolio construction and robust risk management techniques.
Specifically, the Florida-based firm’s strategies include long/short equity investing around digital customer traffic, systematic investments in Chinese commodities futures, real-time mining of alternative datasets in regional macro markets globally, and short-horizon low-latency FX trading.
“New Holland Capital provided us with a sizeable investment and a meaningful operating budget which allowed us to ramp up quickly with respect to technology, data and PMs,” Guillo said of the investment and strategic commitment, which sees the New York-based firm provide significant trading and working capital to AFBI.
Guillo added his firm – which started trading operations in September – will benefit from New Holland’s product structuring expertise and entrepreneurial guidance in the alternative investment industry.
“There is strong demand for high-capacity quantitative macro alpha, and we believe we are competitively placed to deliver it."
New Holland Capital looks to generate alpha across a diverse profile of managers, typically seeking out seeding and co-investment opportunities among smaller and earlier-stage managers, as well as catalyst-driven opportunities with more established firms.
Established in 2003, it was initially an exclusive, non-discretionary advisor to Dutch pensions for alternative investment allocations. In 2020, it expanded to a multi-client model and now manages more than USD20 billion in absolute return strategies for institutional clients.
“AFBI has a highly-skilled and experienced management team with an impressive track record of investing across different market cycles, which creates an attractive opportunity to provide our institutional clients with portfolio diversity and high-quality risk-adjusted alpha,” New Holland Capital CEO Scott Radke said of the partnership.
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics Deals & Transactions Acquisitions InvestmentsCTAs on track to finish October with a flourish
CTAs and trend-following hedge funds have strengthened their returns as October draws to a close, with recent gains pushing the sub-sector’s year-to-date returns further into double-digit territory.
With just two months left until the end of 2021, Société Générale’s main broad-based CTA Index – a key industry benchmark tracking the daily returns of a pool of 20 of the largest CTAs – is now up 10.56 per cent for the year, having gained 3.20 per cent since the start of this month.
Managed futures funds have continued to thrive on strong directional signals across commodities and currencies, with recent surges in oil and gas prices helping managers extend September’s 0.58 per cent rise. Earlier, the sub-strategy had endured what SocGen earlier described as a “challenging environment” during August, when CTAs slipped 0.29 per cent.
Trend-following hedge funds have fared even better in recent weeks. SocGen’s SG Trend Index – a daily return index measuring the performances 10 of the biggest trend-following managers – is up almost four per cent in October. That advance – almost double the 1.85 per cent return made in September – has pushed year-to-date returns for trend-followers up to some 14.8 per cent overall.
Meanwhile, short-term CTAs – which have struggled to notch up meaningful returns lately thanks to the recent global stock market reversal and renewed volatility stemming from inflationary pressures – are set to end this month on a surer footing.
The SG Short Term Traders Index, which ended September largely flat at 0.15 per cent as a result of uneven market momentum, has added 2 per cent so far this month. The benchmark, which provides a returns snapshot of CTAs and global macro managers with 10-day trading windows, is now up 2.35 per cent since the start of January.
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics Markets Results & performance Investing in Hedge Funds