INVESTMENT BANKS 07 HOW MAINLAND ASSETS … · Paulson and Co. 13 Pelham Capital 3 Rhodium Capital...

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Klaus Petersen is setting up private debt firm for Q1 launch BY CHRIS MATTHEWS

03

COMMENT IS THE FCA LAUNCHING A REVOLUTION IN DEALING COMMISSION? 14

BlueBay direct lending pro preps Apera Capital

ANALYSIS 21

LAUNCHES 10

GAMMA LAUNCHES ICELANDIC MACRO AND OPPS FUNDSFunds are fi rst specialist offshore vehicles to invest in country

CLOSURE 03

EM MANAGER APERIOS PARTNERS CLOSES SHOP$85m Emerging Connectivity Master Fund was down -12.4% YTD

INVESTMENT BANKS 07

DEUTSCHE CREATES $50BN HF, STRUCTURED PRODUCTS ARMUnit to be headed by Tarun Nagpal

The shape of fee deals are not uniform and need to be carefully considered. HFMWeek examines the options available for managers

The long and the short of it ISSUE 435 13 OCTOBER 2016

ANALYS IS 16

B L U E B A Y A S S E T M A NAGEMENT’S former direct lending executive Klaus Petersen is readying SME-focused private debt firm Apera Capital.

Apera, which was incorporat-ed with UK Companies House on 26 August, will provide financing to small and medium-sized enterprises throughout Europe.

It will target Germany, UK, France, Netherlands and the Nordics.

Headquartered in London, Apera registered with the FCA on 13 September and is current-ly housed on the Robert Quinn

Advisory platform ahead of a planned Q1 launch.

As banks continue to pull back from the space, prime brokerage teams and industry commentators are seeing a sig-nificant uptick in lending and private debt-oriented firms.

The European private debt market has seen steady growth in recent years.

During the first half of 2016, 20 funds raised a combined $16bn and some $32.6bn was sourced during the previous 12 months, according to Preqin data.

Meanwhile, the direct lending sector has grown exponentially over the past five years.

In 2011, there was $1.1bn in aggregated capital raised across the region. That spiked to $19.8bn last year.

THE GREAT WALL OF CHINESE MONEY

HOW MAINLAND ASSETS AND FUNDS ARE RESHAPING HONG KONG’S HF SECTOR

FEE PRESSURES: WHICH CONCESSIONS ARE WORTH IT?

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NEWS

H F M W E E K . CO M 31 3 - 19 O C T 2 0 16

If you have a news story for HFMWeek, please email: [email protected]

Allianz Capital Partners 1Apera Capital 1Aperios Partners 3Apollo Asset Management 8 Bain Capital Credit 8 Bayshore Capital Advisors 11Blue Mountain 13BlueBay Asset Management 1BlueCrest Capital 6 Cerberus Capital Management 8 Citadel Investment Group 6Deutsche Asset Management 7 Ecofin 5 Fair Oaks Capital 13Gamma 11Kayne Anderson 8Latitude Investment Management 11Laurion Capital 6 Man Group 6 Marshall Wace 9 Mount Kellett Capital 5 Observatory Capital Management 6 Och-Ziff Capital Management 5Odey Asset Management 6, 11Park Square Capital 1Paulson and Co. 13Pelham Capital 3Rhodium Capital 6 RiverNorth Capital Management 11 Rubric Capital Management 5Rye Bay Capital 3Silvaris Capital Management 5 SkyBridge Capital 13Soros Fund Management 6 Sound Point Capital 13TPG Special Situations Partners 8

FUND MANAGER INDEX

I N T H I S

I SSUE

North America and Europe are likely to be the regions most targeted by active pri-vate debt investors in the year ahead, Preqin research shows, with 43% and 46% of investors seeking opportunities in those regions in the next 12 months.

Petersen, who is managing partner at Apera, spent three years at $55bn BlueBay as a partner in its direct lending unit, but departed this summer.

Before BlueBay, he worked for almost eight years at $5bn credit manager Park Square Capital as partner until 2013, and was previously an invest-ment manager at Allianz Capital Partners.

Petersen is joined at Apera by CFO Robert Shaw, and Robert Frost, who is heading up UK business.

Petersen’s departure from BlueBay private debt division,

which has committed capital in excess of €4.5bn ($5bn) and has completed 35 transactions, saw the firm hire Marcus Maier-Krug from European Capital, who will focus on direct lending opportunities in the German market.

BlueBay head of private lend-ing Anthony Fobel said: “As banks continue to move away from mid-market lending, busi-nesses in Europe are seeking alternative lending sources to fund their expansion plans.

“As such, we are seeing sus-tained demand for direct lend-ing funds, which are increas-ingly stepping in to fill this gap.”

The growing interest in pri-vate debt-focused strategies was underlined last week as BNP Paribas announced the first close of its European SME debt fund at €500m ($558bn).

It is unclear how much Apera Capital is looking to raise for its initial close.

c.matthews@hfmweek .com

CONTINUED FROM PAGE 1

LONDON-BASED EM ERG-ING markets hedge fund Aperios Partners is closing down, HFMWeek has learned.

The $85m Aperios Emerging Connectivity Master Fund is down -12.4% YTD end of August, according to HSBC data, and lost -3.4% last year.

Aperios was co-founded in 2011 by CEO Gordon Eichorst, a for-mer HSBC managing director, and Christina McGuire, an ex-GSAM fund manager, who left her CIO role earlier this year.

The EM fund invests in a con-centrated portfolio of small and mid-cap stocks across China, India, Malaysia, the Philippines, Thailand, Indonesia, Kenya and South Africa.

In July, the firm hired Matt Linsey as CIO/portfolio man-ager, replacing McGuire, Kamil Dimmich as head of research and Mark Latham as market strategist.

[email protected]

CLOSURE

EM manager Aperios Partners closes shop

LONDON-BASED RY E BAY Capital, the start-up from ex-Pelham Capital partner Daniel Martin, is eyeing its first year of positive performance, driven by industrials and real estate growth.

The Rye Bay European Fund, which commenced trading in January, returned 3.7% last month, bringing net returns to 7.2% this year as of 30 September, accord-ing to an investor letter seen by HFMWeek.

German roof tile manufac-turer Braas Monier, the target of a recent take-over offer, was the largest long contributor to the mid- and large-cap-focused fund, generating just over 2%.

Martin left $4.2bn Pelham last September. Its flagship fund dropped around 10% in June fol-lowing the UK’s shock Brexit, according to reports at the time.

Rye Bay and Pelham declined to comment.

j.leitner@hfmweek .com

PERFORMANCE

Rye Bay eyeing positive debut year

R ecent Aima research noted an increase in managers offering hurdle rates or management fee discounts based on size or length

of investment as funds and investors both grapple with ways to better align interests.

A growing number of managers tell us that investor pressure to be more inven-tive with fee structures has got noticeably stronger this year as allocators look to eliminate what Albourne founder Simon Ruddick has described as the ‘Angry Dol-lar’ – ie paying for poor or mediocre per-formance.

This dialogue has been particularly intense between large managers that are going through a period of underper-formance and investors concerned such institutions can rely on their big manage-ment fees and may have less incentive to outperform than in the past.

Some have moved to look to address these concerns, such as Brevan Howard offering a 0% management fee on new assets from existing investors, and other large managers are understood to be look-ing at similar arrangements.

In this week’s issue we take a look at some of the structures investors are requesting with growing regularity, when they might or might not be a good fit for

your firm, and how best to apply them (p16-19). For instance, discounting for longer-lock ups can be a great way to reduce business risk, increase investment flexibility and benefit from an illiquid-ity premium, but experts warn manag-ers to stagger timeframes across investors so that a huge chunk of assets does not become available at the same time. Intro-ducing fee claw-backs or low cost versions of existing strategies can come with sig-nificant business risks too.

Also, upcoming Californian pension regulations on fee transparency, which may be mirrored in other regions, may lead to awkward conversations if large investors are seen to be getting huge dis-counts compared to others.

On a recent trip to Hong Kong, local managers, prime brokers and investors all highlighted the huge pent-up wall of Chinese money looking to move offshore to access non-renminbi denominated and non-correlated assets (p21-23).

Increasing capital constraints following recent market volatility have not helped matters but multi-family offices and cor-porations continue to find ways to move more capital offshore and hedge funds, both local and global, are high on their list of investment opportunities.

[email protected]

EDITOR’S VIEWPAUL MCMILLAN

@mcmillan_paul

WA6732

OR298

CA341465

NV714 UT

1013

CO7053

KS189

OK186

TX150182

MO5811

AR132

LA347

MS45

AL158

GA6342

SC245

NC245

TN4830

KY155

VD60

VA9246

DE125

MD7538DC

609

FL125139

AZ2013

AK61

HI112

NM142

ID32 WY

45

SD50

NE133

IA232

WI3111

IN517

IL183175

MI8510

OH10023

NY5441.177

ME132

NH140

VT71 MA

206169

RI214

CT101207NJ

77121

PA15479

MT30

ND40

MN6331

Investors Fund Managers

State

No. of active institutional

investors

Average current allocation to HF (%)

No. of active FoHF

managers

FoHF manager

AuM ($bn)

No. of hedge fund

managersIndustry

size ($bn)

New York 544 17.1% 145 291 1,177 1,112

Connecticut 101 14.5% 27 72 207 334

California 341 14.4% 35 28 465 230

Massachusetts 206 11.0% 22 27 169 213

Illinois 183 11.8% 25 49 175 107

Texas 150 14.6% 18 14 182 56

New Jersey 77 18.8% 7 1 121 55

Florida 125 13.6% 15 11 139 39

Minnesota 63 14.6% 1 1 31 29

Virginia 92 14.3% 6 6 46 25

1 3 - 19 O C T 2 0 164 H F M W E E K . CO M

NEW YORK STILL THE KING BUT HEDGE FUNDS ASSETS ARE SPREAD ACROSS THE US Over one-third of US managers are based in New York , with California and Connecticut the next most popular states, boasting 14% and 5% of managers respectively. New research from Preqin also reveals that New York is the biggest state in terms of hedge fund investors, with 544 investors who have an average 17.1% allocation to hedge funds. The largest three allocators are New York Common Retirement Fund ($6.1bn), Citi Private Bank ($5.8bn) and AIG, which still has $5.2bn invested despite slashing its allocations earlier this year. Over half (51%) of US FoHFs reside in the state of New York , accounting for $291bn of the $569bn managed by that group.

New York hedge funds make up over a third of the $3.1trn global hedge fund industry ($1.1trn), Connecticut makes up $334bn, and California $230bn.According to Preqin data, each of the 50 states has at least one hedge fund investor while only five do not have a hedge fund headquartered there.

MAR

KET

MON

ITOR

BEN

CHM

ARKS

HIG

HS&

LOW

SINDEX PERFORMANCE 9 Sep 2016 – 11 Oct 2016 (%)

FTSE 100 NASDAQ S&P500 HFR INDEX

YTD RETURNS SOURCE: HSBC ALTERNATIVE INVESTMENT GROUP

HEDGE FUNDS

Dorset Energy Fund

53.2%Quantedge Global Fund

43.4%JabCap Global Balanced Fund

-22.1%Odey European

-36.0%

HIGH

LOW-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

11/1007/1005/1003/1029/0927/0923/0921/0919/0915/0913/0909/09

Public pension fund Private sector pension fund Endowment plan Foundation Family office Insurance company Asset manager Wealth manager Sovereign wealth fund Other

Size of US industry

Dec-13 Dec-14 Dec-15 Dec-16

Commingled fund FoHFs Managed futures/CTAs Alternative mutual fund Ucits Other

No. of institutional investors No. of hedge fund managers

New York Connecticut Illinois California Pennsylvania Massachusetts Texas North Carolina DC Florida Other states

Capit

al inv

ested

in he

dge f

unds

($bn

)

Size of US HF Industry ($trn)

1,400 2.5

2.0

1.5

1.0

0.5

0.0

1,200

1,000

800

600

400

200

0

ACTIVE US-BASED HEDGE FUND MANAGERS AND INSTITUTIONAL INVESTORS BY STATE ASSETS UNDER MANAGEMENT OF US-BASED FoHFs BY MANAGER LOCATION

US-BASED HEDGE FUNDS BY STRUCTURE

CAPITAL INVESTED IN HEDGE FUNDS BY US-BASED INSTI-TUTIONAL INVESTOR TYPE (EXCLUDING FoHFs)

20 MOST ACTIVE US STATES IN THE HEDGE FUND INDUSTRY

P A G E

I N S I G H T

Source: Preqin

1 3 - 19 O C T 2 0 16 H F M W E E K . CO M 5

RUBRIC CAPITAL Management, the multi-strategy spin-out from Steve Cohen’s family office, has received the SEC green light as it builds out its team ahead of its upcoming launch.

The firm, led by long-standing Cohen ally David Rosen, registered with the US regulator on 29 September and published a Form D filing for the Delaware-incorporated onshore fund Rubric Capital Partners on 3 October.

Alongside the onshore vehicle there is also the Rubric Capital Master Fund and Rubric Capital Offshore Fund, according to company filings.

Rosen worked at SAC Advisors since 2006 and switched to Point72 Asset Management last year where he ran value-focused Rubric but is under-stood to have departed in February to ready the standalone venture.

Ex-Goldman Sachs prime broker-age director Michael Nachmani joined

the firm in July as COO and chief compliance officer, according to SEC filings.

Other staff include compliance controller Margaret Kossakowski who joined from Amici Capital in June, and former Prosiris Capital pro Jonathan Krautmann.

Meanwhile, Christopher Ballard was made senior analyst at Rubric in July after two years with Och-Ziff Capital Management and most recent-ly, Chris Vaswani joined as a trader from Mount Kellett Capital in August, according to their respective LinkedIn profiles.

The New York-headquartered firm is charging 1.15/1.5% with invest-ments starting at $1m.

Goldman Sachs, Merrill Lynch and Morgan Stanley are listed as Rubric’s prime brokers.

[email protected]

Point72 spin-out Rubric gets SEC greenlight David Rosen’s l/s venture assembles senior team ahead of launch

L AUNCHES

OCTOBER 2016

HFRXHEDGE FUND INDEX(YTD 7 OCTOBER 2016)IN

DICE

S MERGER ARBITRAGE

2.8%EQUITY LONG/SHORT

-0.5%MACRO/CTA

-1.3%

HEDGE FUNDS

1.4%FUNDS OF HEDGE FUNDS*

0.1%

RELATIVE-VALUE

-0.2%EQUITYSHORT BIAS*

3.1%EVENT-DRIVEN

7.2%

EMERGING MARKETS

1.1%EQUITYMKT NTRL

-3.8%MULTI-STRATEGY*

3.7%

HFRI composite

* As of end of Sep 2016


ANALYSIS P16

W hile hedge fund fees have been a bone of contention among allocators, con-

sultants and managers for some time, recent industry research by bodies

such as Aima and Goldman Sachs’ cap intro team, shows that there is starting

to be more consensus on the need to strive for a greater

alignment of interests. But the shape of fee deals and the

details that define investor-specific or firm-wide structures

are not uniform and come with pros and cons which need

to be carefully considered. Over the next three pages we speak to allocators, prime

brokers and managers about some of the options on the

table and the pros and cons of the various approaches.


INCENTIVE FEE HURDLESAs one prime brokerage head puts it, hurdle rates are “more prevalent” than ever. One CTA says

managers have to be more creative with how they apply hurdle rates in order to offer true value to a

range of clients with different tastes and objectives.

“There are different ways to attack it, you need a benchmark, whether that be the SocGen CTA index

or you look to work with clients directly to fi gure out what the core exposure is and align yourself to a

respective index.”As hedge funds are working with a diverse range of investors, they may be forced to offer various

hurdle rates and methods to differing investors, depending on the role they play in each allocator’s

portfolio. According to Aima research, around one-third of managers currently employ hurdle rates in

their funds, with an even split between those using an index and a fi xed hurdle.

In the past fi ve years, 16% of managers had increased their hurdle rate, 5% had reduced and the

remaining 79% had kept it at the same level, according to Aima.

HFMWeek examines the options available for managers BY JASMIN LEITNER AND SAM MACDONALD

ANALYSIS FEE ALIGNMENT

1 3 - 19 O C T 2 0 16

1 6 H F M W E E K . CO M

016_019_HFM435_.indd 16

THE WEEK

Hedge funds holding Puerto Rico’s general-obligation (GO) bonds have taken the commonwealth to court to prevent it from directing sales-tax revenue to repay other debt. The hedge funds, which include Covalent Partners and Monarch Alternative Capital, argue it violates the island’s constitution, which states its GOs must be repaid before other expenses. A portion of the Puerto Rico’s sales-tax revenue is dedicated to repaying bonds, called Cofi nas by their Spanish acronym. Puerto Rico had defaulted on almost $1bn of principal and interest on 1 July, including $780m for GOs.

Hedge funds’ winning streak reaches 7 monthsHEDGE FUNDS posted a seventh consecutive month of positive perfor-mance in September, driven by tech-nology, healthcare and energy-focused exposures, HFR data shows.

The benchmark HFRI Fund Weighted Composite Index gained 0.6% for the month, ending the third quarter up 3.0%. Over the first nine months of 2016, the index has gained 4.2%, outpacing the MSCI World Index but lagging the S&P 500.

Resurgent equity hedge strategies led performance for the month as global markets posted mixed or flat performance.

The HFRI Equity Hedge Index gained 1.1% in September to end Q3 up 4.7%, bringing YTD gains to 4.2%.

The HFRI EH: Technology/Healthcare Index led among sub-indi-ces, gaining 4.0% in its strongest month since September 2010. The healthcare index was also the best performer for the quarter, up 7.6%.

Year-to-date, HFRI EH: Energy/Basic Materials index led performance, up 19% after a 1.5% gain in September.

The HFRI event-driven Index advanced 0.7% in September to lead all main strategies YTD, up 6.7%.

Ken Heinz, president of Chicago-based HFR, said: “With equity mar-kets near record highs, expectations for near-term US rate increases and US election uncertainty dominating the coming months, hedge fund perfor-mance, especially in event-driven and equity hedge sub-strategies, is likely to top equity markets for 2016.”

[email protected]

PERFORMANCEECOFIN POACHES SILVARIS PARTNER FOR PM ROLE

Silvaris Capital Management partner Michel Sznajer has joined London-based Ecofin as a portfolio manager.

Sznajer will work across $1bn Ecofin’s product offering, primarily focussing on its ESG-compliant Vista l/s fund. He will report to senior portfolio manager and partner Matt Breidert .

Bringing more than 20 years’ experience in financial services to the firm, Sznajer joins after two-and-a-half years as a Silvaris partner.

Earlier this year, Ecofin announced the appointment of three new partners, Breidert , Deirdre Cooper and Jean-Hugues de Lamaze, along with a new CEO, Vincent Barnouin.

[email protected]

1 3 - 19 O C T 2 0 166 H F M W E E K . CO M

Kieren McCormack is reportedly leaving his role as Credit Suisse head of prime brokerage sales for Europe, the Middle East and Africa. He will leave Credit Suisse unless he fi nds another position within the bank. Dougal Brech, co-head of prime services for Europe, left earlier this year.

JP Morgan portfolio man-ager Imran Ahmad has been appointed investment director for Standard Life’s emerging market debt team. Ahmad will report to Richard House, head of emerging markets fi xed income and will be based in London.

Bruce Zimmerman, who invested $37bn on behalf of the University of Texas public system, has resigned after nearly a decade on the job. Zimmerman stepped down as CEO and CIO of the University of Texas Investment Management Co (UTIMCO) in a mutual decision with the university.

Independent fi xed income broker-dealer Amherst Pierpont Securities has hired Erez Biala as manag-ing director and head of structured credit trading and organisation. Biala will estab-lish the fi rm’s structured cred-it trading and organisation platform and lead efforts to capitalise on opportunities in the collateralised loan obligation (CLO) and related structured credit markets.

P EO P L EM O V E S

PEOPLE MOVESS P O N S O R E D BY

KEN GRIFFIN’S $26BN Citadel Investment Group has hired Laurion Capital portfolio manager Tania Reif as a PM for its global macro strategies, HFMWeek has learned.

Reif joined the Chicago-based firm last month and is based in its New York office having been with Laurion for three years since 2013.

Prior to Laurion, she worked at Soros Fund Management for four years as part of its emerging markets research and strategy team, follow-ing a three-year stint with Citigroup as a vice-president.

Reif began her career as an economist with the International Monetary Fund (IMF).

According to the FCA register, Citadel has also hired Rhodium Capital trader Demetris Petinou, who joined after three years with the multi-strategy firm.

Prior to Rhodium, he was an emerging markets trader with Observatory Capital Management and before that worked with Invesco Perpetual as part of its European investment grade credit desk.

Meanwhile, former BlueCrest head of quantitative equities, Frank Fehle, is reportedly due to return to Citadel in mid-October after a seven-year break.

Portfolio managers Nanthan Thayananthan and Robert Giannini, also BlueCrest alumni,

PEOPLE MOVES

PEOPLE MOVES

Citadel hires BlueCrest and Laurion Capital PMs Frank Fehle moves to Chicago quant unit, Tania Reif joins NY office

IND

ICES

Odey institutional head of sales departsODEY ASSET MANAGEMENT partner and head of institutional sales Peter Wyllie is leaving the firm, HFMWeek has learned.

Wyllie joined Crispin Odey’s $10bn London hedge fund in June 2013, where he was responsible for heading up the sales and marketing functions.

HFMWeek understands that Wyllie has accepted another role, but it is not known where or in what capacity.

A spokesman for Odey confirmed that the position is going to be filled internally.

Odey has a remaining sales team of six, including head of UK insti-tutional sales, Candida Lahaise, and head of US sales, Tom Towbridge.

Before Odey, Wyllie spent more than 16 years at Deutsche Bank.

[email protected]

MAN AND ROYAL ACADEMY APPOINT AI RESEARCH CHAIR

Man Group and the Royal Academy of Engineering have appointed Professor Stephen Roberts as a new research chair in machine learning at the Oxford-Man Institute (OMI).

Roberts will hold the position for five years, driving development in machine learning and data analytics for real-world applications, including financial modelling.

He currently heads the 30-strong team at Oxford University’s hub for machine learning, which includes OMI, Man’s quantitative finance research unit, which was set up in 2007.

[email protected]

AUGUST 2016

ABSOLUTE RETURN INDICESSOURCE: SG Prime Services

AUG 2016 EST0.2%2016EST4.7%

VOL AT I L I T Y TR AD ING INDEX

SUB-INDICES

EQUITY STRATEGIES

AUG 16 2 . 1%

2016 12 .9%

TRADING STRATEGIES

AUG 16 0. 2%

2016 0.8%

AUG 2016EST0.6%2016EST2.9%

COMMODIT Y TR AD ING INDEX QUANTITATIVE

AUG 16 -1 . 7%

2016 4. 1%

DISCRETIONARY

AUG 16 -0. 5%

2016 -3.9%

AUG 2016EST-1.1%2016 EST-1.2%

MACROTR AD ING INDEX

SUB-INDICES

Lyxor Asset Management has appointed Matthieu Mouly (pictured) as its new UK CEO, replacing Pierre Gil, who has taken up a role within the wider Société Générale group. Mouly will combine the new role with his existing responsibilities as global head of ETF sales and report to Lyxor CEO Lionel Paquin and SocGen UK head Ian Fisher. In his new role, Mouly will focus on deploying all Lyxor services across the UK as well as looking to increase commercial development in Britain and the Nordics region.

THE WEEK

are set join Fehle, who will be part of Citadel’s quantitative strategies (GQS) team in Chicago.

Ex-BlueCrest Capital portfolio manager Ashish Goyal is also set to start next month in Citadel’s global fixed income team.

[email protected]

1 3 - 19 O C T 2 0 16 H F M W E E K . CO M 7

INVESTMENT BANKS

RESHAPING THE HONG KONG SECTORANALYSIS P21

WEE

K I

N N

UM

BER

S

7.7% -13% $300m 7 $1.8bn

Lowering management fees as the fund grows in size was the most popular tactic for increasing the alignment of interests between a manager and its investors with over a quarter of fi rms (28%) saying they have introduced this method or would consider it in the future. Discounts for larg-er tickets and longer-lock-ups were also favoured by around a quarter of managers while other measures, such as introducing fee hurdles (12%) or clawbacks on performance fees (9%) were much less popular with managers.

READER SURVEY

WHAT MEASURES HAVE YOU INTRODUCED OR WOULD YOU CONSIDER INTRODUCING TO INCREASE YOUR ALIGNMENT OF INTERESTS WITH INVESTORS OVER FEES?

Deutsche creates $50bn HF, structured products armUnit to be headed by alt fund solutions head Tarun Nagpal

DEUTSCHE BANK HAS set up a new $50bn-plus business to house its hedge fund, risk premia and retail struc-tured products businesses, HFMWeek has learned.

The Global Investment Solutions (GIS) business was set up last month and is headed up by Tarun Nagpal, who was formerly head of alternatives and fund solutions at the bank.

GIS has a staff of over 100 and brings together Deutsche’s $12bn hedge fund managed account platform, including its $4.7bn alternative Ucits platform, the $13bn Deutsche Risk Premia arm and its $28bn Deutsche db-X markets business.

The formation of the new unit is not thought to have involved any redundan-cies.

The managed account and Ucits plat-forms have been moved from the bank’s asset management arm, Deutsche Asset Management (DAM) to GIS, which sits the investment bank division, which houses GIS.

HFMWeek understands Deutsche wants to bring the investment solutions into one place to simplify how it works with investors looking for customised products.

Deutsche is reportedly now working

on a public listing of its asset manage-ment division following a plunge in its share price as it negotiates a multi-billion-dollar settlement with the US DoJ for alleged mis-selling of mortgage-backed securities.

DAM has €719bn ($798bn) of assets under management, with around 11% in alternatives. It is valued at around €8bn ($9bn) by analysts.

Deutsche restructured its managed account platforms (MAPs), dbSelect and dbAlternatives, in 2013, combin-ing the two offerings into the Deutsche AWM Hedge Fund Platform, overseen by Stephane Farouze, head of alterna-tives and fund solutions.

The investment bank also restruc-tured its sales force at the time. Sales personnel working under the Global Client Group (GCG) umbrella no longer focus on specific products, but instead work across DAM’s offerings.

According to the latest HFMWeek Managed Accounts Universe study, Deutsche’s $12bn AuM made it the second-largest MAP behind $19.3bn Infrahedge.

A Deutsche spokesperson confirmed the creation of GIS.

[email protected]

EE Mobile Voice Recordingat network level now available

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Decreasing management fees as AuM increases 28%

Discount for larger tickets 26%

Discount for longer lock-ups 25%

Introducing incentive fee hurdles 12%

Introducing clawbacks on your performance fees 9%

Hedge funds’ increase in natural gas shorts in week ending 4 October, CFTC data

shows

Year-on-year decrease in companies targeted by activist

hedge funds, according to Lazard research

Amount Goldman’s retirement plan is pulling from Leon

Cooperman’s Omega Advisors

Consecutive months of positive performance for HFR’s benchmark hedge fund index

Estimated extend of losses this year at $20bn UK equity manager Lansdowne Partners

brokerage at one of the leading investment banks in the re-gion. “Th ere is a possibility this dependency on US capital will start decreasing signifi cantly, perhaps by half, as Chi-nese money becomes more forthcoming.” In the short term, tougher capital constraints have hin-dered direct allocations from the mainland. But the PB head says there is still plenty of “juice” in the Chinese single and multi-family office space and a number of legiti-mate ways for family offices, corporations and conglomer-ates to move their money offshore, for instance by creating a Hong Kong arm through an IPO. Many of these types of investors have been comfortable investing in hedge funds for some time, mainly through FoHFs, but are increasingly looking to go “straight to the source”, says the PB head. The cap intro head at another leading prime broker in the region says they have been spending an increasing amount of time in mainland China engaging with multi-family offic-es and the ultra-high-net worth investor segment. Although moving money offshore is still a huge chal-lenge for Chinese investors, the cap intro head agrees that more onshore investors are finding ways to set up offshore entities and that hedge funds are high on the list of invest-ment opportunities given the huge hunger and “pent up demand” for non-renminbi denominated assets that are uncorrelated to the Chinese markets. Prime brokers note different agendas from Chinese investors looking to tap into hedge funds. Some are seek-ing managers with global investment portfolios to diversi-fy away from their Chinese exposure while others are only comfortable investing in markets they know well and so they are looking for offshore dollar-denominated vehicles investing in Greater China markets. Managers and prime brokers report that although there has been no official freeze on Chinese programmes that allow mainland allocators to invest in overseas-listed equi-ties, such as the qualified domestic institutional investor (QDII) and qualified domestic limited partner (QDLP) schemes, unofficially the market events of the past year have taken their toll.

T he fi rst few months of this year were obviously tough for managers with heavy exposure to China as big market falls, government inter-ventions and debt concerns impacted perfor-mance and weighed heavily on the minds of investors. US investors in particular, who make up around 80% of hedge fund allocations in the region, have been expressing nervousness around the market volatility seen earlier this year, according to a number of Hong Kong-based managers of varying size canvassed by HFMWeek.However, there are also reasons to be positive. Prime brokers report a steady launch environment ahead while the sector has not experienced the strength of outflows seen in the US and Europe. Chinese sovereign wealth fund CIC, one of the biggest global investors in hedge funds, recently indicated it was looking to increase its exposure to Asian hedge funds, telling Bloomberg it saw opportuni-ties for hedge funds in the region to benefit from the less efficient markets they operate in compared to their peers in the US and Europe. Sources familiar with recent alloca-tions made by the $814bn CIC say it has started to deploy what could end up being several hundreds of millions of dollars of new capital into local hedge funds.As a reaction to market volatility, there was a tightening of capital constraints from Chinese authorities around money leaving the mainland and the ability of offshore funds to tap into Chinese investors. However, there are still a number of ways for managers to access what could become a huge allocation source, with some prime broker experts predicting the Asian hedge fund sector’s reliance on US investors could halve in the next five years due to an increase in Chinese alloca-tions. There is also a strong hunger for global hedge fund managers from Chinese investors. TAPPING INTO CHINESE INVESTORS“For hedge funds in this part of the world the holy grail has always been to become institutional and one day tap into US pensions and endowments,” says the head of prime


HFMWeek was in Hong Kong recently to hear managers, investors and prime brokers discuss how mainland assets and funds are reshaping the sectorBY PAUL MCMILLAN

ANALYSIS ASIA TRENDS

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H F M W E E K . CO M 21021-023_HFM435_Asia.indd 21

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The $25.5bn Texas Employ-ees’ Retirement System invested $80m in the Complus Asia Macro Fund, managed by Complus Asset Management, last month. The allocation was approved alongside two co-investment commitments with Carlyle Group and an unnamed global opportu-nistic private infrastructure fund of $25m and $100m respectively. The Colorado Fire & Police Pension Associa-tion has invested $40m in Rivulet Capital Partners, a fundamental, concentrated long/short equity strategy focused on developed market mid-cap companies. The $4.1bn pension has also redeemed from Conatus Capital Management and Emerging Sovereign Group, in which it had $36.6m and $38.6m invested respectively. Colorado-based credit manager Deer Park Road has opened an investor relations office in New York. The $1.7bn firm has hired StormHarbour Securities fixed income sales pro Jabez Dewey as IR director. “Dewey will serve as an additional resource to Deer Park and will enhance our relationship with current and future clients on the east coast,” said the firm.

THE PENNSYLVANIA PUBLIC School Employees’ Retirement System (PSers) has approved a $200m commit-ment to alternatives giant Apollo.

The $50.2bn US public pension approved investing in the Apollo European Principal Finance (EPF) Fund III (Dollar A), part of its oppor-tunistic high-yield portfolio, last week.

Apollo, which runs credit, private equ-ity and real estate businesses, established the EPF business in 2007 to take advan-tage of European bank deleveraging.

EPF buys European credit assets and foreclosed collateral such as non-performing loans, distressed or repos-sessed real estate, other hard assets and consumer loans.

“[The] commitment will allow PSers to continue its relationship with a high-conviction manager that is well posi-

tioned to execute on the near-term mar-ket opportunity,” the Harrisburg-based scheme said in its recommendation.

PSers, which increased its high-yield allocation target in September from 6% to 8%, has also previously committed $220 million to Apollo Investment Fund III and $200m to EPF II.

EPF III anticipates finding UK real estate portfolios as a result of Brexit, and also has an active pipeline across Ireland, Spain, Germany and Italy.

PSers’ other high yield-opportunistic managers include Bain Capital Credit, Cerberus Capital Management and TPG Special Situations Partners.

At the 7 October meeting, PSers also agreed to invest $275m in real estate funds and $400m in private equity allo-cations.

[email protected]

To contact us with any investor-related news or developments, email Jasmin Leitner, HFMWeek deputy news editor, at [email protected]

SEARCH LOG CONTINUES ON P12

Penn Sers approves $200m allocation to Apollo European Principal Finance Fund IIICredit strat to sit in US public pension’s opportunistic high-yield bucket alongside Bain, TPG

TEXAS MUNICIPAL RETIREMENT SYSTEMTOTAL AUM $24.3bnCONSULTANT Albourne PartnersACTIVITY Approves allocating $70m to DE Shaw and $60m to Redmile

NORTH YORKSHIRE COUNTY COUNCIL

TOTAL AUM $3.4bnCONSULTANT bfinanceACTIVITY Splits $156m private debt ticket bewteen BlueBay and Permira

RHODE ISLANDTOTAL AUM $7.6bnCONSULTANT Cliffwater/Pension Consulting AllianceACTIVITY Plans to halve its HF exposure over next two years as part of ‘back to basics’ strategy

ENVIRONMENTAL AGENCY

TOTAL AUM £2.7bnCONSULTANT bfinanceACTIVITY Looking for one manager for $175m private debt mandate

FEE FRENZY

Hedge funds have agreed fee dis-counts of between 20% and 25% in negotiations with Cambridge Associates, amid growing consensus that costs need to be more aligned. “During this period of underperfor-mance, we have proactively initiated conversations about fees and other terms with managers, using our scale as large allocators of capital in this alternative asset class,” Simon Leslie, managing director at Cambridge Asso-ciates’ London office, told HFMWeek. “Many hedge funds accept that there needs to better alignment between managers and investors, with more appropriate fee and liquidity terms.” Turn to page 16 to see some of the discount options hedge funds are weighing up.

LA scheme issues $580m hedge fund-of-one RFPTHE $11BN LOS Angeles Water and Power Employees’ Retirement, Disability and Death Benefit Insurance Plan (WPERP) is searching for a man-ager to run a $580m customised hedge fund-of-one mandate.

WPERP issued a request for pro-posals (RFP) on 3 October, following discussions with its consultant, RVK, about how to mitigate poor perfor-mance in its FoHF portfolio.

In June the scheme placed Morgan Stanley, in which it has $93m invested, on a nine-month performance watch after losses of 5.9% YTD as of 31 March.

The scheme also has $100.7m allo-cated with FoHF GAM.

In April, WPERP received a presen-tation on hedge fund structures from RVK, in which the consultant recom-

mended moving away from the tradi-tional FoHF structure and into a fund-of-one, where WPERP would be the only investor.

RVK made the recommendation in response to the board’s search for a “liquid, low volatility, low-correlation approach”, the presentation said.

WPERP is seeking a manager to create a portfolio with “relatively con-servative and non-directional portfolio exposure… diversified across multiple managers and hedge fund strategies,” the RFP documents showed.

Applicants must have at least $7.5bn in AuM and 10 years’ demonstrable experience managing discretionary, multi-strategy hedge fund-of-one port-folios.

Applications must be submitted to RVK by 3pm PST on 24 October. Visit the HFM Investor Relations website to access the RFP document.

[email protected]

SEARCHES

Ocers writes $125m real estate debt ticketTHE ORANGE COUNTY Employees Retirement System has approved a $125m allocation to a real estate debt fund.

The $13bn California scheme’s invest-ment committee agreed to the Kayne Anderson real estate debt fund alloca-tion, subject to final due diligence and contract negotiations, on 28 September.

The allocation to $23bn Los Angeles- based Kayne Anderson follows an “exploratory” alternative fixed income search that Ocers commenced in June.

The search, recommended by CIO Girard Miller, was conducted to find an allocation to “complement or subsume” an existing 14% ($1.5bn) commitment to “diversified credit” strategies across multi-strategy credit, dislocated energy credit and 10 private lenders.

[email protected]

INVESTMENT

ALLOC AT ION

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INVESTOR

HEDGE FUNDS COULD be hit by a “disproportionate” appli-cation of base erosion and profit sharing tax rules (Beps), trade body Aima has warned.

In a letter to the OECD and UK Treasury, seen by HFMWeek, Aima global head of tax affairs Paul Hale said a wide application of Beps could see managers’ oper-ations taxed more.

Beps is the global tax treaty to prevent businesses from shifting profits to low-tax jurisdictions which establishes a new definition of permanent establishment.

Hale said the OECD and Treasury should ensure the rules are applied narrowly in order to stop the creation of new perma-nent establishments.

Such new establishments may see some hedge fund operations hit with bills from higher tax juris-dictions.

“We remain concerned that arrangements which are gener-ally considered to be part of the ordinary course of management and administration of investment funds and other financial services entities such as securitisation vehi-

cles, and which do not lead to base erosion or profit shifting, could be caught by the test,” he said.

He warned a wide interpreta-tion could create new permanent establishments and tax liabili-ties where there is no significant activity taking place in the source country, which would be “dispro-portionate” and that any tax issues could be solved through other methods such as transfer pricing. Aima called for further guidance of amendments to the UK appli-cation of Beps.

[email protected]

REGUL ATOR

FCA to push on P2P transparency with review by year-end THE FCA IS to publish its latest review into the UK’s growing peer-to-peer (P2P) and crowdfunding market before year-end as it hopes to “get regulations right for the sector”, its director of strategy and competition said this week.

Speaking at the LendIt conference in London, the FCA’s Christopher Woolard was optimistic on the future of an industry now worth more than £3.2bn ($4bn), but stressed the need for strong governance in the nascent sector.

“We want innovation in the market but we won’t compromise on market integrity… you [as a firm] have to have the right permissions otherwise you could be breaking the law,” Woolard told attendees at the two-day event.

In March 2014, the UK regulator published its first ever rules relating to the P2P and crowdfunding industry and in July asked for industry input on its new post-implementation review which Woolard said will be completed before the end of 2016.

“Our rules are high-level and are designed to give firms some flexibil-ity,” Woolard added. “Much of the P2P industry has embraced transparency but firms are telling us there is more to be done.”

The calls for greater transparency come at the end of a difficult year for the industry which was hit with the misselling controversy at major US operator Lending Club.

Institutional interest in the space in the UK has been growing, in part due to an increase in institutional investors.

The launch of a first investment trust by UK giant Funding Circle was well-received by investors with industry heavyweight BlackRock buying 12.7 million shares in the vehicle. Marshall Wace-owned MW Eaglewood runs a $900m investment trust focused on P2P loans.

[email protected]

Muzinich GC joins $110bn SWFM U Z I N I CH G E N E R A L COUNSEL and CCO Kurt Alfney has left the credit giant to join the Abu Dhabi Investment Council (Adic).

Alfrey joined the Adic in March after two years with Muzinich following stints with JAE Credit Management and New Amsterdam Partners as GC

Former Goldman Sachs pro Adam Kaufman has replaced Alfney as GC while former Avenue group compliance manager Steve Kreinik takes over as CCO.

The $27bn manager, which has a particular focus on high yield, senior land middle market loans, is headquartered in New York and has offices throughout Europe.

Adic is a $110bn sovereign wealth fund which span out of the giant Abu Dhabi Investment Authority (Adia), which has nearly $800bn in AuM, in 2007.

[email protected]

PEOPLE MOVES

21 DECEMBER 16EMIRClearing obligation: Category 3

31 DECEMBER 16US DOL ADVICE RULESNew fiduciary duty monitoring RIAs likely to come into force

31 DECEMBER 16BASEL IIINon-systemically important banks must satisfy capital rules

31 DECEMBER 16EMIR REPORTINGEsma begins to collect OTC derivatives data from managers

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To contact us with any compliance-related news story or development, email Sam Dale, HFMCompliance editor, at [email protected]

Hedge funds battle to stop wider tax hit from Beps global tax treatyTax treaties could ‘disproportionately’ hit fund entities, warns trade body Aima

TA X

COMPLIANCE

8 NOVEMBER 16USUS presidential election takes place

SS&C GlobeOp is set to file a motion to dismiss a case of “gross negligence” brought by a CTA in relation to a cyber-breach which resulted in the transfer of $6m to fraudsters. Speaking in an interview with HFMWeek, SS&C chairman and CEO Bill Stone (pictured) said the lawsuit brought by Thomas Funk’s Tillage Commodities Fund was “without merit” and that he expects the case to be dismissed by the New York Supreme Court. In docu-ments filed on 16 September, Tillage said after receiving a series of spoof emails SS&C authorised the transfer of $5.9m to Hong Kong bank accounts without conducting proper checks. The firm is seeking $20m in damages.

THE WEEK

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REYKJAVIK AND LONDON-based fund manager Gamma is launching two Dublin-domiciled Iceland-focused hedge funds, HFMWeek has learned.

The Gamma Iceland Macro Fund is targeting a 10% yearly return by investing in Krona-denominated fixed income gov-ernment obligations and covered bonds issued by Icelandic banks, deposits and bank bills.

The multi-asset Gamma Ice-land Opportunities Fund invests in a number of Icelandic hold-ings including government bonds, deposits, corporate credit, equities and real estate companies, either directly or through funds, targeting a 20% annual return.

Both funds sit on the DMS Ire-land AIFM platform and are the first to invest into Iceland whilst being domiciled outside of the country, Gamma says.

The macro fund has a manage-ment fee of 1.25% and no perfor-mance fee, while the opportunity fund will charge 1.5/15 over a 6% hurdle rate. The two funds have launched with between €60m

($67m) and €80m ($89.5m), with Gamma expecting to have AuM of around $200m in the coming months.

Gamma was founded in 2008 by co-CIOs Gisli Hauksson, also CEO, and Agnar Tomas Möller, and has total AuM of around £700m ($890m), running a variety of strategies focused on covered

bonds, corporate credit, leveraged equity and government bonds.

KPMG Ireland has provided structure advice to the new funds, Dillon Eustace was legal coun-sel and SEI is the administrator. Gamma is the official partner of Pimco Europe in its native Ice-land.

[email protected]

Gamma launches Dublin-domiciled Icelandic macro and opps fundsFirm says they are first specialist offshore vehicles to invest in Nordic country

L AUNCHES

RiverNorth launches closed-end fundRIVERNORTH CAPITAL Man-agement has launched a $200m closed-end fund specialising in fixed income.

The Chicago-based manager has launched the RiverNorth/Double-Line Strategic Opportunity Fund to opportunistically invest in fixed income securities and tactically invest in other closed-end funds.

The fund debuted on the NYSE on 28 September. $3.6bn River-North serves as investment adviser and DoubleLine as sub-adviser.

The fund raised $210m in its IPO of common stock shares and, should the underwriters exercise the overallotment option in full, the fund will raise $242m.

It is the second fund to be co-managed by RiverNorth and Dou-bleLine, a $100bn Californian manager.

Since December 2010, the two firms have co-managed an open-end mutual fund that combines respec-tive closed-end fund and fixed income expertise.

The new fund will have two principal investment strategies: Tactical Closed-End Fund Income, managed by RiverNorth; and Opportunistic Income, managed by DoubleLine.

[email protected]

L AUNCHES

To contact us with any start-up-related news story or development, email Jasmin Leitner, HFMWeek reporter, at [email protected]

LAUNCH ACTIVITY CONTINUES ON P13

ODEY SPIN-OUT SET FOR NOVEMBER DGF LAUNCH

Odey Asset Management spin-out Latitude Investment Management is launching a long-only diversified growth fund in early November, the firm has announced.

Founded by former Odey Atlas fund manager Freddie Lait, Latitude was launched on 11 April 2016, according to Companies House filings.

The Latitude Horizon Fund will employ a diversified portfolio, includ-ing non-equity investments used to generate uncorrelated returns thereby reducing risk without compromising performance.

Asset class allocation will be deter-mined by analysing cyclical factors with a long term, capital preservation objective, the firm said.

Latitude said the Horizon Fund will

charge management fees of 1% and no performance fee, because “strong performance should always be an objective, alongside risk control and preservation of capital”.

Lait worked at Odey Asset Manage-ment for six years, with a focus on fundamental stock selection and asset allocation.

“Latitude is well capitalised and ideally placed to provide a best in class diversified growth fund to institu-tions and private wealth managers in the UK and Europe,” said Lait.

Working alongside Lait is COO Mark Carter who was most recently head of operations and risk management at London-based emerging markets macro manager Vinci Zafferano.

[email protected]

LAZARUS MANAGEMENT

NAME Lazarus Behavioural Finance FundSTRATEGY Behavioural financeLAUNCH DATE Q3 16

GAMMA

NAME Gamma Iceland Opportunities FundSTRATEGY Iceland multi-assetLAUNCH DATE Sep 16

GAMMA

NAME Gamma Iceland Macro FundSTRATEGY Iceland fixed incomeLAUNCH DATE Sep 16

ARCHITECH CAPITAL MANAGEMENT

STRATEGY TMT-Asia focusLAUNCH DATE Oct 16

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The UK arm of Paul Singer’s (pictured) Elliott Management cut its wage bill by nearly 25% in 2015 as it bounced back into profit. The activist giant reported profits of £2.6m ($3.2m) after losses of -£2.7m ($3.4m) in 2014. Wages and salaries for the year fell from £68.2m ($85m) in 2014 to £52.2m ($65m) although the number of employees rose from 61 to 72. Remuneration of its highest paid director was £2.6m ($3.2m) in 2015, a steep rise from the top earner of £1.5m ($1.9m) in 2014. However, it is a dramatic fall from the top earner in 2013, who took home £38m ($47m), reflecting more than half of total wages at the firm for the year.

THE WEEK

Keita Arisawa, who oversaw TPG-Axon Capital Manage-ment’s Hong Kong office, is reportedly in the early stages of setting up a new hedge fund with the backing of his boss. The launch comes after once $13bn TPG-Axon announced it is scaling back and closing the Hong Kong office. Sunrise Capital, the California-based CTA, has launched two beta generat-ing strategies. The Real Estate Optimised Growth (REOG) and Environmental, Social and Governance Optimised Growth (ESGOG) funds join the ten existing funds on the systematic firm’s Beta Plus platform. Singapore-based Light-house Canton is launching a robo-adviser service with Welnvest to give accredited investors access to hedge fund strategies at lower cost. The partnership with WeInvest, a platform-as-a-service provider, will open up a range of strategies, asset classes and currencies with fees starting from 0.4%. Camares Capital, a hedge fund started by former Deutsche Bank traders in 2013 with backing from Reservoir Capital Group and Saba Capital, is reportedly liquidating. The London-based firm managed about $500m and is in the process of returning capital to investors.

L A U N C H E S & CLOSURES I N B R I E F

LAUNCHES IN BRIEF S P O N S O R E D BY

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INDEPENDENT ADVISORY firm Bayshore Capital Advisors is launch-ing a multi-manager private debt fund, HFMWeek has learned.

The Global Alternative Income Fund is set to launch in November and hold a portfolio of high-yield pri-vate debt strategies focused on short and moderate duration loans.

London and Tampa-based Bay-shore is targeting annual returns of between 9% and 11% with income distribution options. Loans in the portfolio are expecting to have an average length of between one and two years.

The underlying lending will be spread across direct leveraged lend-ing, speciality finance, asset based lending and trade finance.

Bayshore’s fund will sit on ML Capital’s MontLake Qiaif Icav plat-form and launch with initial AuM of $20m. The fund has a $250m capacity.

The fund counts Northern Trust as its administrator and depositary, PWC Ireland as its auditor and Walkers Ireland as its legal adviser.

“The world is running out of options for safe, yielding investments. A 30-year bull market for tradi-

Bayshore launches multi- manager private debt fundSlated to launch on MontLake Qiaif platform in November

L AUNCHES

Denver manager launches behavioural finance fundDENVER-BASED INVESTMENT manager Lazarus Management has launched a behavioural finance fund.

The Lazarus Behavioral Finance Fund launched this summer with around $10m in AuM, including sever-al million in investment from the firm’s partners.

The fund, which offers monthly liquidity and no lock-up on assets, charges no management fee. A 50% incentive fee is levied on gains over 10%.

The strategy will incorporate research from Tom Howard, a profes-sor at Denver University specialising in investment management and interna-tional finance.

Howard is also CEO and director of research at AthenaInvest, an investment advisory and research firm in Colorado.

Lazarus manages $150m across three funds, which include a micro-cap and Israeli investment fund.

[email protected]

L AUNCHES

TREBUCHET CAPITAL MANAGEMENT

STRATEGY Event-drivenLAUNCH DATE Oct 16

RAMIUS

NAME Ramius Merger Arbitrage Ucits FundSTRATEGY Merger arbitrageLAUNCH DATE Aug 16

LYXOR ASSET MANAGEMENT

NAME Lyxor Evolution Fixed Income FundSTRATEGY Multi-strat credit LAUNCH DATE Aug 16

KLS DIVERSIFIED

NAME KLS Fixed Income UcitsSTRATEGY Global creditLAUNCH DATE Sep 16

POSTMODERN PARTNERS

STRATEGY Volatility arbitrageLAUNCH DATE Q1 2017

tional fixed income investments is extended, and the return outlook is highly unattractive. Investors must now consider allocating to alter-native strategies that can provide both income and portfolio protec-tion,” said Bayshore CIO Patrick Stutz.

Allocations to the fund will be subject to a $500,000 minimum investment with a management fee of 1.5% and a two-year lock up.

Bayshore currently has total firm-wide assets of around $250m across a variety of strategies.

The firm runs a multi-strategy portfolio of alternative strategies alongside an alternative income strategy, which is closed to new investors and invests in private credit strategies for investors seek-ing quarterly income. It opened its London office earlier this year.

[email protected]

SEARCH ACTIVITY

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A WEEKLY COMPENDIUM OF RECENT HEDGE FUND SEARCHES AND INVESTMENT MANDATES

S E A R C H A C T I V I T Y

CONSULTANT NEPCACTIVITY Issued RFP for ‘income-generating’ strats, will allocate $40m to three managers. 3 October deadline.

ITALIAN INSTITUTIONTOTAL AUM $193bnCONSULTANT bfi nanceACTIVITY Allocated to Winton Capital, IPM and Muzinich & Co.

MERCED COUNTY EMPLOYEES’ RETIREMENT ASSOCIATIONTOTAL AUM $650.8mCONSULTANT VerusACTIVITY Received HF education ses-sion, could decide to boost allocation later this year

BRUNEL PENSION PARTNERSHIPTOTAL AUM £23bnACTIVITY 10 UK local pensions from South West England selected bfi nance for asset pooling advice

OKLAHOMA POLICE PENSION & RETIREMENT SYSTEMTOTAL AUM $2.3bnCONSULTANT Asset Consulting GroupACTIVITY Selected Wellington Manage-ment for alternative fi xed income mandate

LONDON PENSION FUND AUTHORITYTOTAL AUM £4.1bnACTIVITY Invested in Winton Capital and GSA last quarter

POLICEMEN'S ANNUITY AND BENEFIT FUND OF CHICAGOTOTAL AUM $2.4bn

NZ SUPERANNUATION FUNDTOTAL AUM $22.5bnACTIVITY Added BlackRock merger arbitrage fund to portfolio

CALIFORNIA STATE TEACHERS’ RETIREMENT SYSTEMTOTAL AUM $193bnACTIVITY Plans to invest $8.7bn in HFs over next three years

KENTUCKY RETIREMENT SYSTEMSTOTAL AUM $10bnCONSULTANT RVKACTIVITY Re-evaluating its 10% hedge fund allocation

CHICAGO PARK EMPLOYEES' ANNUITY & BENEFIT FUNDTOTAL AUM $383mCONSULTANT Marquette AssociatesACTIVITY Redeemed $22m investment in EnTrust Capital

Continued from page 8, compiled by HFMWeek

SEPTEMBER 2016

ROYAL BOROUGH OF BERKSHIRETOTAL AUM £1.8bnCONSULTANT Barnett WaddinghamACTIVITY Eyeing increase in private debt and equity, including HF secondaries

ROYAL BOROUGH OF BERKSHIRETOTAL AUM £1.8bnCONSULTANT Barnett WaddinghamACTIVITY Redeemed £188m ($240m) from IPM and Gresham; plans to re-duce Grosvenor FoHF ticket by £100m

To list here, contact Jasmin Leitner at [email protected]

Auto-enrolment - act now to be ready for the new requirements With almost 400,000 employers reaching their staging date by October 2016, early planning is imperative to successfully manage the preparation process.

We know that auto-enrolment implementation can feel like a burden, which is why we’ve created our comprehensive advice and support service. Designed with you in mind, our integrated service aims to remove the stress of auto-enrolment and provide you with an overview of the required changes, so that you are well-equipped to deal with the challenges ahead. Visit www.understandautoenrolment.co.uk or contact our Financial Planning team to find out more:

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Rachel O’Donoghue Partner T +44 (0)20 7556 1256 E [email protected]

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Audit • Taxation • Accounting • Payroll • FCA Reporting • HR Consulting

1 3 - 19 O C T 2 0 16 H F M W E E K . CO M 13

LAUNCH ACTIVITY

A WEEKLY COMPENDIUM OF HEDGE FUND L AUNCH ACTIVIT Y

L A U N C H A C T I V I T Y

BLOCKHOUSE CAPITAL MANAGEMENTSTRATEGY L/S Equity and CreditLAUNCH DATE Q4 16

TAGES CAPITALNAME Tages Alternative Risk Premia FundLAUNCH DATE Sep 16

EAGLE VIEWNAME Eagle View Vega FundSTRATEGY CLOLAUNCH DATE Sep 16

SEVEN INVESTMENT MANAGEMENTNAME Seven FortressSTRATEGY Equity market-neutralLAUNCH DATE N/A

FAIR OAKS CAPITALNAME Fair Oaks Dynamic Credit Ucits FundSTRATEGY CLO UcitsLAUNCH DATE Sep 16

NAME Trium CCI Technology L/S FundSTRATEGY L/s tech equityLAUNCH DATE Q4 16

ALLIANZ GINAME Allianz Structured Credit Return FundSTRATEGY Structured returnLAUNCH DATE Sep 16

CASERN CAPITALNAME Seven FortressSTRATEGY Distressed debtLAUNCH DATE Apr 17

STROBUS CAPITALSTRATEGY Global macroLAUNCH DATE H1 17

Continued from pages 10&11, compiled by HFMWeek

REPORTED IN SEPTEMBER 2016

NORDEA ASSET MANAGEMENTNAME The Nordea 1 – Global Long Short Equity FundSTRATEGY L/s equityLAUNCH DATE Sep 16

COVENANT CAPITALNAME CCM Tactical Growth ProgramSTRATEGY Market-neutralLAUNCH DATE Sep 16

MIDNIGHT HOLDINGSSTRATEGY Credit and equity event-drivenLAUNCH DATE Q1 17

COLUMBUS CIRCLE INVESTORS

To list here, contact Sam Macdonald [email protected]

QW CAPITALNAME QW Equity Market & Sector Neutral Ucits FundSTRATEGY Quant market neutralLAUNCH DATE Oct 16

OSSIA PARTNERSNAME Ossia Partners FundSTRATEGY Global long/short equityLAUNCH DATE N/A

REPORTED IN AUGUST 2016

TIBER CAPITALNAME Tiber Diversifi ed Ucits FundSTRATEGY SystematicLAUNCH DATE Sep 16

ACADEMY INVESTMENTSNAME Academy Quantitative Global Ucits FundSTRATEGY SystematicLAUNCH DATE TBA

KINGDON CAPITALNAME Lyxor / Kingdon Global Long-Short Equity FundSTRATEGY Global long/short equityLAUNCH DATE N/A

Credit launches were high on the agenda in September, with a number of notable new debt funds revealed by HFMWeek through the month.

Jeff Teach, responsible for a $500m portfolio at $9bn New York manager Sound Point Capital, is launching his own distressed debt and special situ-ations hedge fund called Casern Capital.

Elsewhere, Steven Boyd, who ran the mort-gage team at $22bn credit giant BlueMountain, is

launching an event driven fund which will invest across the capital structure with a strong credit focus.

New York-based SkyBridge Capital launched its first insurance dedicated fund earlier in the month. The private fund, part of the SALI platform, is being run by SkyBridge’s CIO and co-managing partner Ray Nolte and senior portfolio manager Troy Gayeski.

Sihan Shu, the ex-Paulson and Co. managing director who left in June to start his own firm, is to launch new venture Strobus Capital and will run a global macro strategy.

In the liquid alts space, credit manager Fair Oaks Capital launched the first collateralised loan obliga-tion (CLO) Ucits with the debut of the Fair Oaks Dynamic Credit fund on the Alpha Ucits platform.

[email protected]

CREDIT LAUNCHES HIGH ON AGENDA

LAUNCH DATABASED ON NEW SEC-REGISTERED

HEDGE FUND FILINGS

EQUITY

5$20m

SEP 2016

66$4.3bn

YTD

MULTI-STRATEGY

3$1.3bn

SEP 2016

37$31.5bn

YTD

DEBT DIVERSE

0$0mSEP 2016

11$73.3bn

YTD

DEBT DISTRESSED

0$0mSEP 2016

2$987m

YTD

OTHER

11$4.1bn

SEP 2016

103$22.1bn

YTD

TOTAL

19$5.4bn

SEP 2016

219$132.2bn

YTD

DATA PROVIDED BY

COMMENT&ANALYSIS

THE LONGVIEW

1 3 - 19 O C T 2 0 161 4 H F M W E E K . CO M

S peculation and uncertainty around Brexit may have overshadowed key industry developments in recent months. Considering that Mifid II implementa-

tion had already been delayed earlier in the year, from January 2017 to January 2018, you could be forgiven for believing that the initiative had been left by the wayside.

However, just as the FCA is pressing on with Mifid II enactment considerations, so too are our clients, who have continued to prepare for its eventual implementation. The directive was announced with a plethora of key objectives, and one in particular for the investor commu-nity: to clamp down on trading commission bundling.

Trading commission bundling often results in investors’ research spend being misappropri-ated; spent by the buy-side without a clear dem-onstration of the returns it offers. The belief is that by forcing brokers to price and charge for services separately, transparency and account-ability will be enhanced and achieve better exe-cution and better use of clients’ funds to pay for “substantive” research.

We have already seen the regulatory frame-work having a positive impact on the industry, with an emerging trend of asset management firms cutting down on their analyst research

budgets, a move that is sure to reduce any mis-appropriation of funds and deliver better out-comes for investors.

Whether the UK plans to launch its own Mifid-based framework in the event of a ‘hard Brexit’ following the country’s scheduled divorce from the EU remains to be seen.

Nevertheless, UK-based fund managers looking to continue marketing funds across the European Economic Area (EEA) will need to effectively meet these best practice require-ments to have a salient business, and we have seen particular examples of large mutual funds with UK business units taking a tough stance on how research is valued.

Nomura has already begun scaling back its research arm as the business of providing research becomes less profitable, while some fund houses have changed their business struc-ture to end charging investors for research.

In its updated consultation paper on Mifid II implementation released in September, the FCA confirmed the continued use of Commission Sharing Agreements (CSAs) – a type of account that many feel propagates the lack of transpar-ency in the industry which the FCA is targeting.

Subsequently, we believe a new status quo will emerge with the adoption of the research payment account (RPA) requirements, where-

by costs will be agreed from the outset, making fund managers more accountable for the ser-vices they are using on their clients’ behalf.

As research quality comes under increased scrutiny, widely-distributed generic research will also be considered of lesser value. Whereas bigger firms will need to focus on differentiating their research offerings, mid-tier brokers could benefit from the opportunity to become high quality research specialists on small or mid-sized companies.

The impending legislative effect has ignited the research industry again, and this will open up more opportunities to grow market share in a sell-side dominated pool. More participants in the market can only be a good thing for the investor, and it will be interesting to watch the market shift in the run up to the latest deadline.

Despite the prevalence of CSAs in the US, Mifid II presents the industry with the oppor-tunity to lead by example with the widespread adoption of RPAs. It is hoped that best practice of this nature, which aims to protect the inves-tor, will help put an end to the “Wild West” of commission bundling in the fund industry. The Mifid II requirements will, however, be quite onerous, particularly for the smaller fund play-ers, who may struggle with implementation due to lower headcounts. Larger funds, however, will likely be able to absorb the costs, and we could potentially see a spike in headcounts at these larger-sized funds as a result.

Ultimately, fund managers of all sizes will likely face a research headache in meeting Mifid II requirements.

The days of managers using dealing com-mission to pay for investment research taken from the clients’ funds are coming to a close, with regulators asserting that this will have the direct effect of strengthening inducement rules, driving better competition and ensuring that research is only produced and consumed where it adds value to investment decisions.

JOSHUA MAXEY is managing director at research provider Third Bridge

JOSHUA MAXEYIs the FCA launching a revolution in dealing commission?

While there has been anecdo-tal evidence of downward fee pressure for some time, a consensus on the need

to align investor and manager interests through fee arrangements is emerging in more concrete terms.

Hedge funds using management fees as a profit source is a common investor gripe, which Aima research indicates managers are looking to address, with 76% of respondents considering reduc-ing their charges as assets grow.

Firms that already have a significant asset base are also reducing fees on new asset invested, often a good-will gesture in times of poor performance. Brevan

Howard will charge 0% on new assets invested by existing allocators while Caxton Associates is reducing manage-ment fees from 2.5% to 2.2% on invest-ments over $500m, reports indicate.

Other options gaining traction include offering lock-up discounts or reducing fees for sizeable allocations, while founders’ shares or seeding dis-counts are considered essential, prime brokers indicate. But none of these arrangements can be taken lightly; each comes with pros and cons.

Locking up capital creates stability, but if the timing of investment or asset transition isn’t considered, the expiry of that share class and consequent

redemptions can create serious busi-ness risk.

And while institutions pride them-selves on negotiating significant breaks, hedge funds can face accusations of treating other clients unfairly depend-ing on the disclosure of such deals, with some COOs indicating that a sliding fee scale dependent on ticket size must be transparent and made available to all clients.

Managers running commingled funds have a fiduciary duty to all lim-ited partners, and need to ensure that any discounts agreed to don’t negative-ly impact that base, or more crucially, their business viability.

THE SHORTVIEW

JASMIN [email protected]

JUST AS THE FCA IS PRESSING ON WITH MIFID II ENACTMENT CONSIDERATIONS, SO TOO ARE OUR CLIENTS”

WE ARE DISAPPOINTED THEY COULDN’T MAKE AN INDEPENDENT DECISION. THEY ARE REWARDING THE GOVERNMENT FOR BAD BEHAVIOUROmega Advisor’s Leon Cooperman after Goldman Sachs’ retirement plan pulled $300m from the firm

CHALLENGING ENGINEERING PROBLEMS ARE RARELY BLACK AND WHITE, SO THE KEY IS TO DEVELOP WAYS TO MANAGE UNCERTAINTYProfessor Stephen Roberts, the new machine learning research chair at the Oxford-Man Institute

WE WANT INNOVATION IN THE MARKET BUT WE WON’T COMPROMISE ON MARKET INTEGRITYFCA director Christopher Woolard addressing a Lendit conference in London this week

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ISSN 1748-5894. Printed by The Manson Group. © 2016 all rights reserved. No part of this publication may be reproduced without written permission of the publishers. No statement in this magazine is to be construed as an invitation to invest in hedge funds.

Hedge Funds Care sets sights on ‘Beast of Provence’ for charity cycleRiders looking to raise over £50,000 to help combat child abuse in 24-hour challenge

Industry cycling enthusiasts will this week take on notori-ous Tour de France peak Mont Ventoux as they look to raise

over £50,000 ($61,600) for Hedge Funds Care UK (HFC).

After HFC’s London to Paris cycle ride last year raised £60,000 ($73,800), 34 riders will attempt to join the Club des Cinglés du Mont-Ventoux by climbing all road three ascents of the “Beast of Provence” inside 24 hours.

The Ventoux challenge has already met its fundraising target.

Cordium Mirabella, the event’s lead sponsor, has generously con-tributed to the challenge.

HFC UK also counts Citco,

Throgmorton and Centaur as sponsors of this year’s cycling event.

The ride ha s b ee n organised by HFC board members and Centaur part-ner Gavan McGuire alongside for-mer Cantab Capital COO Chris Pugh.

HFC is a charity set up by the hedge fund industry aiming to prevent and treat child abuse.

In June, HFC raised £10,000 ($12,300) through an auction of a limited edition signed photo-graph of actress Brigitte Bardot by Sir Terry O’Neill.

ANY INSIDE INTEL? TIP US OFF AT:

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HK government head to receive 100WHF honour

T he Hong Kong Monetary Authority’s (HKMA)head of direct investment, Clara Chan, will become the latest recipient of 100 Women in Hedge Funds’ Asia Industry Leadership Award.

A qualified barrister, Chan is a key member of the HKMA’s Reserves Management Department and leads the long term growth portfolio team, investing in pri-vate credit and equity, real estate and infrastructure.

Prior to joining the HKMA, she served as an admin-istrative officer in the Hong Kong SAR government and had responsibilities across various departments for policy formulation, market development, regulatory

issues and administration. “This award calls attention to the senior women

in our industry who, by virtue of their important roles, stand apart for their leadership, authority and accountabilities. This couldn’t be more true of [Chan],” 100WHF co-chair Charlotte Stopford Sackville said.

Chan will be presented with the award at the 100WHF Hong Kong Gala on 16 November 2016, hosted at the China Club. The event beneficiary is The Hong Kong Women’s Foundation, with funds desig-nated for their youth mentoring programs. Donations can be made via 100WHFs CEO Amanda Pullinger.

THE WEEK IN QUOTES

1 3 - 19 O C T 2 0 16 H F M W E E K . CO M 15

While hedge fund fees have been a bone of contention among allocators, con-sultants and managers for some time, recent industry research by bodies such as Aima and Goldman Sachs’ cap intro team, shows that there is starting

to be more consensus on the need to strive for a greater alignment of interests. But the shape of fee deals and the details that define investor-specific or firm-wide structures are not uniform and come with pros and cons which need to be carefully considered.

Over the next three pages we speak to allocators, prime brokers and managers about some of the options on the table and the pros and cons of the various approaches.


INCENTIVE FEE HURDLESAs one prime brokerage head puts it, hurdle rates are “more prevalent” than ever. One CTA says managers have to be more creative with how they apply hurdle rates in order to offer true value to a range of clients with different tastes and objectives.

“There are different ways to attack it, you need a benchmark, whether that be the SocGen CTA index or you look to work with clients directly to fi gure out what the core exposure is and align yourself to a respective index.”

As hedge funds are working with a diverse range of investors, they may be forced to offer various hurdle rates and methods to differing investors, depending on the role they play in each allocator’s portfolio. According to Aima research, around one-third of managers currently employ hurdle rates in their funds, with an even split between those using an index and a fi xed hurdle.

In the past fi ve years, 16% of managers had increased their hurdle rate, 5% had reduced and the remaining 79% had kept it at the same level, according to Aima.

HFMWeek examines the options available for managers

BY JASMIN LEITNER AND SAM MACDONALD


1 3 - 19 O C T 2 0 161 6 H F M W E E K . CO M

SEEDERS HAVE ONE GOAL IN MIND: TO WIN IN MULTIPLE WAYS THROUGH YOUR AUM GROWTH, YOUR RETURN PROFILE, THE FEES THEY TAKE FROM YOU, WHILE FOUNDERS’ INVESTORS WIN BY YOU GENERATING THE BEST RETURNS

” US-BASED PORTFOLIO MANAGER

DISCOUNT FOR LOYALT YThis is a model which, while not uniformly described in fund documents, is common among larger allocators. One large investor told HFMWeek that they often seek to have a reducing management fee if they have investments with a manager for a long-term period.

Another way in which this may be done is through a most favoured nation clause (MFN), a side letter provision which allows the investor which has an MFN to align themselves to any more favourable contract clauses that a newer investor might have agreed on. Typical provisions included in a, MFN relate to the investor receiving better fee terms, greater transparency rights or better redemption rights.

One COO said: “I think it ’s difficult to come up with a loyalty discount later on [in a fund’s life]. If it ’s there in the beginning it ’s fine because it ’s disclosed and everyone will get it if they’re there long enough. But if you just decide to do it later on, then it has a feeling of the arbitrary, possibly driven by a negative scenario. If you do it out of the blue you set a precedent for the future. I think it ’s really important to do the right thing, and do the right thing for everyone.”

DISCOUNT FOR L ARGER TICKETSProviding better fee terms on the basis of a getting a larger investment is as common as providing lock-up discounts, according to research by Goldman Sachs, with 49% of investors using institutional (large ticket) share classes, according to a recent survey by the investment bank .

But depending on the size of the discount, and whether the terms are part of a standard offering to everyone or arranged via a side-letter for a specific allocator, managers can run the risk of angering investors and could face accusations of treating them unfairly.

New Californian regulations coming into force from 1 January 2017 requiring the disclosure of hedge fund fees paid by public pension plans in the state, and being considered by Illinois, Kentucky, New Jersey and Alabama, could hamper future negotiations, Calstrs has argued, because managers will be reluctant to offer significant fee breaks if they will be publicised.

“You can’t just give a discount to one allocator to get that larger ticket – you would have to offer it to everyone else and you end up pricing your business downwards,” one manager explains, discussing the difficulties of offering specific clients “sweetheart” deals based on the size of an investment.

Additionally, if the fee terms for a large ticket are better than their founders’ class terms, managers are effectively undermining their early-stage investors, one Boston-based COO explains. “If a fund has only so much capacity you have to maintain the integrity of the early-stage reduced class and honour that initial commitment.”

Managers stress that the fairest way to offer large ticket discounts is to come up with a standardised sliding scale, not specific to a particular investor, where anyone investing that amount will benefit from reduced fees.

This also negates the use of side letters and won’t trigger most favoured nations clauses, if applicable. “We have standardised fee arrangements: for an investor that has more than $50m with us, our regular

fee structure of 1.5/20 gets dropped to 1.5/17 and someone with over $100m gets to 1.25/17,” one COO at a New York manager with several credit and event-driven funds explains.

“Everyone knows this is what we’re doing, so the discussion is over – we found this approach works for us, because you have to just run your business at some point.”

DISCOUNT FOR LONGER LOCK-UPSSecuring capital over a particular period, such as three years, in exchange for a fee discount can offer a number of benefits. It may attract an investor group that diversifies your overall client base and creates stability over the agreed timeframe.

“We decided to do this with a fixed amount of capacity and offered it on a first-come-first-served basis, with endowments and foundations particularly interested,” one London-based COO explains. He notes that ideally, the money going into that discounted share class needs to be staggered.

“The danger is that everything switches and comes in on day one and then it all vests at the same time, so as you tend towards the anniversary you suddenly have significant business risk [of a significant chunk of assets leaving] which can have the opposite effect to the stability you’re trying to create.”

One lawyer who has advised hedge fund clients on creating lock-up share classes explains that in cases where existing investors move their investment over, it is possible that the redemption dates remain tied to their initial fund investment, as opposed to the transition date. He adds that using investor-level gates can also help stagger redemptions.

The COO adds that while discounting fees on the basis of a longer lock-up may seem like a “no-brainer”, managers have to be comfortable with the terms they are offering, particularly if it is likely that a number of clients will take them up. “You can’t have terms you secretly hope no-one will buy.”

OPTIONS FOR STARTING UPFounders’ share classes, day-one or early-bird discounts are all permeations that have almost become standard practice for emerging managers and start-ups, the head of consulting at one bulge bracket prime explains. “It ’s a good way of gathering and accelerating initial interest, it offers a significant, permanent discount and it has become almost essential,” he says. The difficulty is deciding at what level to cap the initial discount or founders’ share.

“Should it be a percentage of the total capacity or whatever is on the table? Sometimes investors come and say I’m in for $100m and want to reserve another $200m, so the manager has to get comfortable running $300m at discounted fees,” he says, adding that the economics of the cash flows need to work .

Similar considerations go into structuring seed deals, which can focus on providing preferential terms on the fund investment, or can revolve around the management company, where a seeder might receive a percentage of all revenues.

“Seeders have one goal in mind: to win in multiple ways through your AuM growth, your return profile, the fees they take from you, while founders’ investors win by you generating the best returns so there’s a different dynamic,” one US-based portfolio manager in the process of launching a fund adds.

As well as making sure the economics of a seed deal don’t end up taking too much profit out of partners’ hands at a later stage if a start-up is successful, market experts caution that not all seeders are compatible with all other investors types, which needs to be considered in advance.

The prime consulting head stresses that all discounts and deals entered into by emerging managers need to be based on a sound analysis of a manager’s current costs and a realistic estimate of future expenses, where – ideally- “a little fat” is built in, to allow a firm to hire another analyst or upgrade some infrastructure if necessary.

1 3 - 19 O C T 2 0 16 H F M W E E K . CO M 17

IN A CHANGING WORLD,

BY THE TIME YOU MASTER THE GAME, THE RULES HAVE CHANGED.

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DECLINING MANAGEMENT FEES AS AuM GROWSA common step taken by funds is to reduce management fees as the assets in the fund grow. The regularity of such a move was highlighted by Aima research last month, which showed that 76% of managers would introduce a tiered structure as their AuM increases.

One $300m equity-based manager says that when assets in their fund increase above $500m they will start to tier down management fees, although different managers have different approaches.

Brevan Howard recently reduced management fees to 0% on new assets invested by existing investors to try and retain clients potentially looking to flee the fund, while Caxton Associates is said to be reducing management fees from 2.5% to 2.2% on investments over $500m.

Other managers are introducing reductions from launch. HFMWeek recently revealed the launch of PostModern Partners, a volatility arbitrage fund which carries a 0.6% management fee alongside a 10% performance fee above a 5% hurdle.

Speaking to HFMWeek, one administrator said they had seen a fund which had applied a 0% management fee but was charging performance fees of 50%. While this is an extreme example, managers appear much more willing to make cuts to their management fees, especially in extended periods of poor performance, than to make dramatic reductions in their performance fees, and sentiment from investors is the same.

CL AW-BACKS ON INCENTIVE FEESFee claw-backs became part of industry practice in the years following the 2008 financial crisis and while they are still used in certain situations they are not as widespread, market participants indicate. The rationale behind this practice is that investors may become concerned that they could have lost money overall during a three-year period but paid out a significant chunk in performance fees in the years where performance was good, with claw-backs allowing them to take back fees in periods of underperformance.

Such a structure does add business risk to the firm if staff continue to receive incentives on an annual basis.

“Some staff aren’t understanding of such a move because they want to be paid their fee in full and you could put yourself in a difficult position if you do pay them in full but then you are actually waiting for another year or two to get that performance fee back from the investor, upon the proviso that you generate good performance,” one manager told HFMWeek.

Instances where managers do allow performance fee claw-backs, the most popular model is spread over three years with 50% of the fee payable at the end of the first year and further 25% payments in the subsequent two, according to Aima. There have been instances where the initial payment is less than 50% and conditional payments are made over a longer period of four or five years.

L AUNCHING CHEAPER VERSIONS OF YOUR MAIN STR ATEGY

Launching a less volatile or leveraged version of a flagship fund is also becoming more prevalent among managers, particularly in the systematic space, with these products typically carrying lower, or flat fees.

While an attractive solution for investors looking for downside protection without any bells and whistles, the performance of these carve-out funds has in some cases created pressure for a firm’s other products.

According to BarclayHedge data from August, Graham’s Tactical Trend Capped Beta fund, which charges approximately 50bps, returned 1.59% YTD while its flagship K4D fund, which charges a 2% management fee has seen negative returns of -0.47% over the same period.

While a source close to Graham said the 50bps fund’s asset-raising had come from new investors, questions have been raised as to what additional benefits an investor is getting from a higher priced product.

The ability to offer fund exposure at such low prices requires significant pre-existing infrastructure, and prime brokers also warn that launching a fund should never be price-driven.

“Investors’ decisions to allocate aren’t driven by price so launching a cheap, headline-grabbing product doesn’t guarantee success. The decision to invest is driven by a need to have that strategy in the portfolio and an assumption of [past] performance reflecting potential future performance,” the PB consulting head explains.

“If you have a product that charges a performance fee only and you manage other products that do charge management fees, then as an investor you want to be sure that you aren’t subsidising the new product,” he says, adding that hedge funds need to carefully manage client perceptions.

Clearly, managers can look to align their interests with investors through a range of fee deals and discounts, with the industry in agreement on the need for hedge funds to offer some flexibility.

But not all reductions are feasible, or desirable, depending on the strategy, life-cycle of the manager or mix of investors in-volved, and market participants stress the need to consider any fee breaks carefully, particularly if a manager has limited capacity or can command a premium based on a genuine niche skillset.


1 3 - 19 O C T 2 0 16 H F M W E E K . CO M 19

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brokerage at one of the leading investment banks in the re-gion. “Th ere is a possibility this dependency on US capital will start decreasing signifi cantly, perhaps by half, as Chi-nese money becomes more forthcoming.”

In the short term, tougher capital constraints have hin-dered direct allocations from the mainland. But the PB head says there is still plenty of “juice” in the Chinese single and multi-family office space and a number of legiti-mate ways for family offices, corporations and conglomer-ates to move their money offshore, for instance by creating a Hong Kong arm through an IPO. Many of these types of investors have been comfortable investing in hedge funds for some time, mainly through FoHFs, but are increasingly looking to go “straight to the source”, says the PB head.

The cap intro head at another leading prime broker in the region says they have been spending an increasing amount of time in mainland China engaging with multi-family offic-es and the ultra-high-net worth investor segment.

Although moving money offshore is still a huge chal-lenge for Chinese investors, the cap intro head agrees that more onshore investors are finding ways to set up offshore entities and that hedge funds are high on the list of invest-ment opportunities given the huge hunger and “pent up demand” for non-renminbi denominated assets that are uncorrelated to the Chinese markets.

Prime brokers note different agendas from Chinese investors looking to tap into hedge funds. Some are seek-ing managers with global investment portfolios to diversi-fy away from their Chinese exposure while others are only comfortable investing in markets they know well and so they are looking for offshore dollar-denominated vehicles investing in Greater China markets.

Managers and prime brokers report that although there has been no official freeze on Chinese programmes that allow mainland allocators to invest in overseas-listed equi-ties, such as the qualified domestic institutional investor (QDII) and qualified domestic limited partner (QDLP) schemes, unofficially the market events of the past year have taken their toll.

The fi rst few months of this year were obviously tough for managers with heavy exposure to China as big market falls, government inter-ventions and debt concerns impacted perfor-mance and weighed heavily on the minds of investors. US investors in particular, who make

up around 80% of hedge fund allocations in the region, have been expressing nervousness around the market volatility seen earlier this year, according to a number of Hong Kong-based managers of varying size canvassed by HFMWeek.

However, there are also reasons to be positive. Prime brokers report a steady launch environment ahead while the sector has not experienced the strength of outflows seen in the US and Europe. Chinese sovereign wealth fund CIC, one of the biggest global investors in hedge funds, recently indicated it was looking to increase its exposure to Asian hedge funds, telling Bloomberg it saw opportuni-ties for hedge funds in the region to benefit from the less efficient markets they operate in compared to their peers in the US and Europe. Sources familiar with recent alloca-tions made by the $814bn CIC say it has started to deploy what could end up being several hundreds of millions of dollars of new capital into local hedge funds.

As a reaction to market volatility, there was a tightening of capital constraints from Chinese authorities around money leaving the mainland and the ability of offshore funds to tap into Chinese investors.

However, there are still a number of ways for managers to access what could become a huge allocation source, with some prime broker experts predicting the Asian hedge fund sector’s reliance on US investors could halve in the next five years due to an increase in Chinese alloca-tions. There is also a strong hunger for global hedge fund managers from Chinese investors.

TAPPING INTO CHINESE INVESTORS“For hedge funds in this part of the world the holy grail has always been to become institutional and one day tap into US pensions and endowments,” says the head of prime


HFMWeek was in Hong Kong recently to hear managers, investors and prime brokers discuss how mainland assets and funds are reshaping the sector

BY PAUL MCMILLAN


1 3 - 19 O C T 2 0 16 H F M W E E K . CO M 21

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“The Chinese never say yes or no to this type of thing but the sense is lots of managers have been waiting a long time for requests for their next batches of capital and they are unlikely to be answered anytime soon,” says one man-ager who has been involved in the QDLP scheme.

L AUNCH ACTIV IT Y Experts in the region report a steady launch market but with numbers down on last year, owing mainly to the mar-ket volatility seen earlier in the year. However a number of launches are being prepped from managers spinning out of established names whiles experts also note a rush of so-called “sunshine” funds from mainland China look-ing to establish offshore vehicles. Eurekahedge data notes 19 launches this year, compared to 60 last year although prime broker experts say small launches often fly under the radar.

Among the funds stirring decent interest is ex-Balyasny Asia head Avinash Abraham’s Torq Capital, which is being prepped for launch later this year and could receive back-ing from Blue Pool Capital, an investor whose clients include top Alibaba Group executives. The firm is understood to be looking to mirror Balyasny’s approach of creating a multi-strategy plat-form utilising a number of portfolio man-agers and is said to be on the hunt for experienced names to join Abraham.

A couple of former Point72 trad-ers are also launching new funds, including William Leung’s Kadensa Capital. He spent ten years at Steve Cohen’s firm and was seen as one of its most profitable trad-ers. Ex-Point72 portfolio manager Irene Liaw is also launching tech-focused Architech Capital.

Elsewhere, ex-Joho Capital ana-lyst Jeff Lopez has launched a TMT-focused fund called Atomvest while Rafiki, a global macro fund spinning out of Credit Suisse and led by Lucas Kiely, is also catching the eye of investors.

Smaller managers are finding it much hard-er to get attention and a number of local emerg-ing managers stressed to HFMWeek the difficulties in attracting capital at present. One COO at a smaller manager which launched in 2014 and has demonstrated top quartile performance says the start-up market in par-ticular is dependent on US investors who have displayed increasing nervousness since the market volatility earlier this year.

“People are naturally conservative about emerging managers anyway and when it is not your own region you are going to be even more cautious,” he says.

One prime broker head adds: “Most allocators are thinking- what is my opportunity cost at the moment given the recent market moves? Why don’t I just wait it out for another three months? I don’t sense everyone pulling the trigger right now.” He also notes the lack of seed capital in the region compared to last year, when HS Group was active in the market with a number of deals.

Other prime brokers, however, say they have been kept busy by the large numbers of mainland China asset man-agers looking to establish a presence in Singapore or Hong Kong. “The market is going nuts with Chinese money funding lots of small sub-$100m start-ups from the

mainland,” says one head of prime brokerage at a firm with a particular focus on smaller managers.

Other prime broker heads note a particular growth in systematic strategies moving from the mainland due to the increased restrictions on futures trading in China, including a number of successful quant market neutral strategies.

Press reports have noted XY Investments, founded by an AQR alumnus and Co-Fund Co, led by former BNY Mellon Western Fund Management chief executive Hu Bin as two new offshore funds worth following.

One prime broker head says the only thing that might stem the growth of quant is that these strategies often require lots of leverage and balance sheet is in limited sup-ply at many of the region’s prime brokers. He also notes a lack of institutional rigour at a number of sunshine funds he has taken a look at.

“Some managers are lacking sophistication on the infra-structure side of things,” he says. “They are unlikely to get through a serious ODD assessment but they often have their own ways to obtain capital from mainland sources.”

TALENT MANAGEMENT, RECRUITMENT AND RENT

COOs at hedge funds of all sizes told HFM-Week that recruiting and keeping hold of the

right talent was one of their biggest busi-ness concerns. One senior manager at

a multi-billion dollar fund says he has been looking to hire for a number of roles for two years and is currently finding it very hard to source local talent.

“The education system here pro-duces very clever people but not enough people who are prepared to challenge authority and the status-

quo- we need independent thinkers,” he says.

As a consequence the firm is increas-ingly looking at which functions need to

be housed locally and what can be central-ised in Europe and the US. The head of prime brokerage at one of the

top tier investment banks adds that in his view the talent pool for COOs and other senior operations staff

is light in the region. Another PB head at a large bank agrees. “You have an abundance of PMs and traders but really solid COOs are very difficult to come by, mid-level head of operations people are hard to come by.”

He says funds try not to look overseas, due to the huge relocation costs often associated with such moves, and instead look to pick from other regional funds, prime brokers or admins.

This “abundance” of traders has helped the continued growth of large global multi-strategy platforms in the region with the likes of Balyasny, Millennium and Point72 all said to be looking to grow their pools of investment talent and managers like Folger Hill, run by SAC Capital alumni, launching into Asia.

Managers are also reporting huge increases in rent, often 20% to 30%, due to the increasing number of Chinese asset managers moving to Hong Kong who are prepared to pay whatever it takes for well-located office space. As in other areas, the “pent-up” wall of money finding its way gradually from the mainland is having a big effect and has become a dominant theme in the region.


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AIFMD:THE TECH PERSPECTIVE

Since 2009, AIFMD has posed its fair share of challenges for hedge funds. To com-ply, firms need to create an XML schema which can convert Esma’s templates into the required format. At the start, quite a few companies set off to develop in-house

solutions for AIFMD, only to abandon the project a few years later. With changing validation rules from Esma and potential shifts in UK passporting rights following Brexit, what are the alternatives for COO’s who want to keep AIFMD in-house without developing and main-taining software?

HIDDEN COSTSAIFMD initially looks like a simple XML schema pro-ject. If you asked your IT department ‘how much would it cost to build this?’, they will produce a relatively low figure. Writing an adapter which translates data into an XML schema is almost certainly something they’ve done before, and if it’s just another XML implementa-tion – how hard can it be? In hindsight, firms often only see that there’s a lot more to it after they’ve sunk costs into the solution.

The reality of such a project is that maintaining a functioning AIFMD solution which supports all the schemas and variances means employing two or three people dedicated to the task. There needs to be a sub-ject matter expert who understands the requirements, a software developer who updates the tool whenever Esma or your local regulator make changes, and a QA tester responsible for the tool’s quality. Now the project is no longer an IT expense, but a cost for the business as a whole.

This, of course, is not a hurdle only reserved for AIFMD. A simple reality of business is that most firms struggle to fully value the costs of their IT projects. It’s almost impossible to put an accurate budget on the efforts of other departments, especially if two or three other teams are going to be involved. Perhaps this is a standard dilemma for all IT builds, but what becomes more costly with AIFMD is the fact that the project will never really ‘end’. The validations and schemas need continuous updates, and as the business grows addition-al funds and entities may expand your reporting require-ments. For regulatory experts, the introduction of new legislation – such as this year’s Ucits V – is simply one more directive to manage. For firms trying to file with-out support, this is yet another costly, on-going project.

A UNIQUE CHALLENGEWriting an adapter to translate internal data into an XML schema is simple enough, so why is it so challeng-ing? In the first instance, you’re dependent on a third-party; the regulators. This means you are not work-ing with co-workers or partners keen to fit the project around your existing development roadmap. Esma and local competent authorities release requirements when they need to, and this will not necessarily line up with your internal business plan. To keep up, an in-house tool would need to have resources available at all times for whenever updates are released. This is not a viable option for most firms who have their roadmaps estab-lished for the next six months to two years in advance, so it is far better to outsource this to a team in constant contact with the regulators.

It’s reasonable to presume that in the next few years, AIFMD requirements are going to reduce, but this will not make managing the process in-house any more cost effective. Even if the time between updates gets longer, you still need to maintain a team within the business who know what they’re doing. When the updates are released, you need the ability to respond quickly and move forward with the solution. If you don’t have that, it’s an immediate problem. Ultimately, there is no way of knowing what AIFMD is going to look like over the next few years, so you are far better off letting regulatory specialists handle it rather than trying to keep up with the changes in reporting requirements.

Roi Lustik Cohen, director and CTO of Arkk Solutions, examines AIFMD from a unique angle

Roi Lustik Cohen is responsible for the delivery of our financial reporting tools. From vision and concept through to development cycles and product launch, Roi works with his team to ensure that Arkk’s clients have the best solution for their regulatory and statutory reporting needs. To date he has orchestrated the development of our iXBRL, AIFMD, Form PF, COREP and Solvency II reporting tools. His background in data architecture, security and software consulting are vital to Arkk Solutions’ continued success.

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MANAGING MULTIPLE JURISDICTIONSFor AIFMD, it’s not just updates from one regulator which you need to consider. It’s updates from regulators all across Europe, all with different rules and different schemas. Depending on where you’re reporting into, you could be facing double the work submitting to two jurisdictions, and many companies file into five or six. The difference between the XML sche-ma for the UK and the Netherlands for example, is the equivalent of starting again from scratch. Multiple jurisdictions means maintaining relation-ships with multiple regulators, more quality assur-ance work, and rewriting the XML schema. Again, what starts as a simple XML project to change, say the German schema for the Danish requirements, ends up being an unmanageable maintenance task.

It’s understandable that an in-house build ini-tially looks like an easy and simple solution. Unless you’ve been in the regulatory space before it’s impossible to know how much you depend on the regulators. So what’s the alternative if you need to manage AIFMD in-house but want to remove the burden from your business? As well as bypassing the challenge of developing a solution, you don’t want to be lumbered with installing and maintaining a third-party’s system.

THE SOLUTIONThat’s why using a cloud platform is the most viable

option for fund managers. The provider can cater for upcoming changes in validations, and taxonomy roll outs are automatic and instant, rather than requiring lengthy on-site software upgrades.

Essentially you outsource the business drains while maintaining control over your data and team. There’s no need to update the schema and validations, and no requirements for in-house product testing. On top of the development cost savings, you don’t need a product special-ist to devote their time maintaining relation-ships with Esma and all other local regulators. With secure online conversions, you can com-pletely remove the burden from the IT depart-ment – only the end users need to work with your supplier. A software vendor can split the cost of developing, maintaining, updating and testing a product across its hundreds of clients. Maintaining your own system means footing the entire bill yourself.

Ultimately an in-house build is never just about the tech issues. Internal projects con-cern the technology and the expertise that has

to come with it, which for a regulation as complex as AIFMD is a full-time job.

People should be focusing on their core business objectives, and AIFMD reporting is hardly anyone’s core business, unless you are yourself a regulatory reporting specialist.

” WRITING AN ADAPTER TO

TRANSLATE INTERNAL DATA INTO AN XML SCHEMA IS SIMPLE ENOUGH, SO WHY

IS IT SO CHALLENGING FOR AIFMD

”

AN EXIT FROM BREXIT FOR YOUR FUNDS.As your management company we provide you with easy access to the EU. We re-domicile or launch your funds under Luxembourg’s UCITS regime. As your AIFM we passport your AIFs for distribution across all EU member states.

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To promote your company, email: directory@hfmweek .com or call UK +44 (0)20 7832 6615 // US +1 (212) 268 4919

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Peter Hughes, CEO and founder // Rosie Guest, Global Marketing Director, [email protected] Apex Fund Services, established in 2003, is one of the world’s largest specialist fund administration and middle offi ce solutions providers. These core services are surrounded by products from information delivery to capital introductions support and delivered through a geographically diverse network of 36 offi ces located in 26 countries and domiciles. The globally distributed locally implemented service model has been purposefully developed to meet the changing demands of managers maintaining consistent growth and returns in management; as a result Apex has become the benefi ciary of investments by some of the largest funds and institutional investors in the world. Develop your fund structures to access global investors by utilising in-depth knowledge and services from one of the world’s leading independent fund administrators. More information is available at www.apexfundservices.com, or follow us on twitter @ApexFundService

Robin Bedford, CEO // [email protected] // T: (441) 234 0004 // Jorge Hendrickson, SVP, Head of Sales // [email protected] // T: (646) 274-1305 // Cell: (203) 246-7914

Founded in 2006, Opus is an award-winning, privately owned and operated full service global fund administrator. Within a SSAE16 approved process, Opus provides fully integrated and automated administration services to domestic and offshore hedge fund, private equity and alternative investment vehicles. The platform has received widespread industry recognition including “Best Overall Fund Administrator with AUA under $30bn” by HFMWeek, and Top-Ranked Fund Administrator by Global Custodian for fi ve consecutive years. For more information on Opus Fund Services, please visit www.opusfundservices.com

Gerben Oldekamp // T: +31 (0)334673898 // [email protected] // www.circlepartners.com //Circle Partners, Utrechtseweg 31D, 3811 NA Amersfoort, The Netherlands.Circle Partners is a fi nancial services organisation specialised in rendering accounting and administration, shareholder and organisational services to investment funds established in a different number of jurisdictions and with diverse investment strategies. Our goal is to assist asset managers in building their investment fund and enabling them to concentrate on the asset management business through a process of outsourcing virtually all back-offi ce functions to Circle Partners. Special care and attention is given to accurate and swift communication with the fund manager and shareholders to enhance client satisfaction and confi dence and to assist in creating a sound reputation for the fund.

Kristin Steele, head of marketing and business development // T: +1 704 927 1860; email: [email protected] is an independent fund administrator providing administrative support to global investment managers adopting diverse investment styles. Our comprehensive product offering specialises in hedge funds, fund of funds, private equity funds, and ILS funds. IKONIC was founded by a leadership team with signifi cant in-depth knowledge in fund administration and has created a company that is client focused. IKONIC currently services over 140 client entities from its three offi ces and clients range from emerging managers to large institutional funds. In November 2011, IKONIC and the Horseshoe Group formed a joint partnership called ILS Fund Services Ltd. to provide fund administration and valuation verifi cation services to funds that invest in insurance linked securities. IKONIC Fund Services and ILS Fund Services are licensed fund administrators by the Bermuda Monetary Authority.

Linda Gorman // Chief Executive Offi cer // [email protected] // T: +353 1 523 8002 // www.quintillion.com

Quintillion is a specialist Dublin based provider of fund administration to alternative investment funds. We provide back and middle offi ce services to a diverse range of fund structures, strategies and domiciles supported by class leading technologies and our expert operations group. Following our start-up or conversion process, funds are serviced by client-centric investor services and accounting teams delivering an accurate, timely and transparent administration solution all within strict deadlines.

Punit Satsangi, EMEA Managing Director // [email protected] // T: +44 (0)20 3310 33041 St. Martins Le Grand, London, EC1A 4AS // www.sscglobeop.comSS&C GlobeOp is a leading fund administrator providing the world's most comprehensive array of fi nancial technology products and services under a public, independent, single platform. Our expertise in business process outsourcing supports complete lifecycle capabilities, available on a stand-alone basis to hedge funds, fund of funds, private equity funds, family wealth offi ces, and managed accounts. Furthermore, our dedicated regulatory solutions group combines exper-tise and technology to provide our clients with the infrastructure and support they require to stay compliant. By outsourcing to SS&C GlobeOp, clients can reduce their technology investment and operational risks, leaving them more time to focus on asset generation and portfolio management.

Theorem Fund Services LLC, Stephen Giannone // Managing Partner // (312) 952-1455 // [email protected] // Mikhail Davidyan // Managing Partner // (312) 488-9604 // [email protected] Fund Services is a multi-service fund administrator offering a unique turn-key solution to investment managers, combining institutional-level tech-nology with strong industry experience and a deep understanding of our clients’ needs and goals. Founded on the belief that traditional fund administration platforms needed to evolve into a more comprehensive multi-service offering, Theorem enables managers to maximize their service delivery via dramatic fee effi ciency and scalability. Traditional core services of fund administration and investor reporting are uniquely and seamlessly packaged with comprehensive tax solutions for the fund and the manager. Our success is measured by that of our clients. We are committed to insuring our clients receive the very best value combined with the highest quality service at the best price.

Thalius Hecksher, Global Director // [email protected] // T: +1 (786) 877 1923James Martin, Group Marketing Director // [email protected] // T: +44 20 7935 1503

Providing customised services to 400 funds worldwide with AuM exceeding $30bn, we offer clients global reach, local knowledge and exceptional service, backed by a 37-year track record as one of the largest truly independent providers of administration services to the global fi nancial services sector. Visit us at www.tridentfundservices.com to fi nd out more about our fund administration services across ten jurisdictions in Asia, the Caribbean, Europe and North America, all integrated into the 24 jurisdiction reach of the global Trident Trust Group.

Tony Fischer, President // Tel: +1 267 349 8065 // www.umbfs.com

The Alternative Investment Services division of UMB Fund Services offers a complete back-offi ce solution for hedge funds, funds of funds, registered hedge funds and private equity funds. Our full-service lineup includes product formation assistance, fund administration and accounting, investor accounting and reporting, tax preparation and reporting, and custody (through our affi liate, UMB Bank, n.a.). We are known for high-touch service, leading-edge technology, and the stability of a highly capitalized parent that’s been around for 100+ years. Ask us about Registered Fund Solutions, the industry’s fi rst turnkey solution for launching and servicing a registered hedge fund.

Paraic Cosgrave, Global Head of Sales and Relationship Management, Hedge Fund Services // T: +44 20 7595 5178 // [email protected] BNP Paribas Securities Services is a leading global custodian and fund services provider, backed by the strength of a universal bank. With over 45 years of operat-ing history, our Hedge Fund Services teams have forged a solid reputation for superior client service and customised solutions across administration, custody and banking. We have built strong partnerships with established alternative funds, including successful start-ups and many of the world’s largest managers. We continue to invest in our capabilities, confi rming our commitment to alternative investments. By partnering with us, you benefi t from expert technology, designed specifi cally for alternatives, that simplifi es and enhances data reporting and analysis. Our full suite of services allows you to streamline your operations, while the strength of our balance sheet mitigates fi nancial risk to your investors.

Are you in the City looking for a Change?Regulatory Incubation Pioneer

Out of Change comes OpportunitiesBREXIT

Sturgeon Ventures LLP & Sturgeon Alternatives Limited are Authorised and Regulated by the Financial Conduct Authority (FCA) Sturgeon Ventures LLP is a Registered Advisor with the Securities and Exchange Commission (SEC)

Sturgeon Hong Kong is a trading name of Lynx Investment Partners Ltd (SFC License BGI 102) a firm regulated in Hong Kong by the Securities and Futures Commission

www.sturgeonventures.com

For further information please contact [email protected]

• We provide FCA Umbrella for Investment Managers • We Provide FCA Regulatory Compliance• We provide unique business solutions• We have superior business expertise and

regulatory knowledge• We offer an institutional-quality client service• We have an extensive global network• We are integrated, inspired and independent• We are transparent, timely and team players

• We provide FCA Hosting for Advisors/Corporate Financiers/3rd Party Fund Raisers

• We create long lasting authentic relationships• We maintain an unrivalled client retention rate• We are recognised with industry awards• We think out of the box• We are persistent, patient and passionate• We are creative, curious and considerate

www.aifmsolutions.com

All our lives have been touched by female cancer, in particular, breast, ovarian and/or cervical. As a predominantly Female team, Sturgeon have taken up a challenge, and we all hope

to get a little fitter. The chaps will be there on the night with puncture kits.On May 27th 2017 we will ride 100km though London crossing our home bridge in Putney twice

Do watch the video: www.ridethenight.co.uk www.justgiving.com/sturgeonridethenightforcancer

“Life is like a bicycle, to stay balanced you must keep on moving.”Thank you so much to the continued generosity of our friends, and clients and service providers.

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Anthony Tuths // email: [email protected] // Tel: 212 829 3203

WithumSmith+Brown, PC is a full-service Certifi ed Public Accounting and Consulting fi rm ranking 28th largest in the nation and 6th largest in the Northeast, with 550+ staff in 12 offi ces across six states and Grand Cayman. The fi rm’s Financial Services Industry Group serves clients refl ecting the diversity of the industry, including hedge fund managers, private equity fi rms, mortgage bankers, broker-dealers and regulated investment companies. Our professionals understand the challenges of operating in a complicated, highly regulated environment, and how to successfully comply with SEC and other rules which often require the expertise of independent auditors and consultants. Visit www.withum.com for more information.

David Jarman, Partner //T: +44 (0)20 7556 1262 // [email protected] // Peter Chapman, Partner // T: +44 (0)20 7556 1415 // [email protected] Buzzacott LLP // 130 Wood Street, London, EC2V 6DL // [email protected] // www.buzzacott.co.uk

Buzzacott is a London based accountancy fi rm with a specialist team offering audit, accounting and taxation services to the hedge fund sector. Buzzacott is a market leader for the provision of start-up, HR, FCA reporting and business support services to UK and US managers and their stakeholders. Buzzacott's Expatriate Tax Team has over 60 tax advisers with UK and US tax qualifi cations and can provide the added compliance and advisory tax services to clients with US shareholders or employees.

Vistra T: +852 2521 3661 // F: +852 2845 9198 // email: [email protected] // www.vistra.com // Vistra, 19/F Lee Garden One, 33 Hysan Avenue, Causeway Bay

Vistra's specialist colleagues provide tailored trust, fi duciary, fund and corporate services. We form strong, trusted connections with our clients, based on a deep understanding of their professional worlds, drawn from our extensive experience of working in those same worlds – across fi nance, structuring, law, and ac-counting. Our approach is always personal. We develop perceptive solutions to the often complex needs of each individual client, from international corporations to high-net-worth individuals.

BlackRock, Catherine Streeter, email: [email protected] // T: +44 20 7743 5693 // Annemarie Teutsch, email: [email protected] // T: 1 212 810 3184 // blackrock.com/cashBlackRock’s dedicated Alternatives Cash Management team appreciates the specifi c cash management requirements of the Alternatives sector and is ideally placed to provide innovative, transparent solutions for managing unencumbered cash, cash collateral and UCITS cash. Market and regulatory pressures, like Basel III, can make it challenging to leave cash with the prime broker or at the custodian. For clients seeking to preserve capital, maintain liquidity and achieve a competitive yield, BlackRock’s suite of products, including AAA-rated, T+0, government, or prime money market funds, and customised managed accounts, can provide an effective solution.

International Management Services Ltd. Geoff Ruddick, Head of Funds // T: +1 (345) 814 2872 // Gary Butler, Managing Director // T: +1 (345) 814 2874 // [email protected] // www.ims.ky

International Management Services Ltd was one of the fi rst in Cayman to specialise in providing professional independent directors to the fund industry. Today, we are a leading provider of corporate governance and associated services to the fund industry. All of our fi duciaries are registered with the Cayman Islands Monetary Authority as ‘Professional Directors’. Our team has over 200 years of collective experience in the fund industry and provides services to some of the largest global hedge fund organizations. We are one of the largest and longest standing truly independent providers of such services.IN

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TION Christian Bekmessian // T: +1 212 891 4062 // [email protected]

Peter Cogan // T: +1 212 891 4047 // [email protected]

EisnerAmper LLP is a premier full-service accounting, tax and administration fi rm with global capabilities. EisnerAmper has led the way in establishing and building a highly trained and dedicated Hedge Fund Group. Our professionals have experience and expertise in the intricacies of the regulatory and tax environment, the valuation of complex fi nancial instruments and the challenges of maintaining strong accounting and investment controls. The professionals of EisnerAmper have a decades-long service record to the fi nancial services industry, giving us an understanding of the problems you face on a daily basis, as well as the ability to provide practical solutions. www.eisneramper.com

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Braant Bookkeeping & Accountancy // 6-8 Bonhill St, London, EC2A 4BX // T: 0207 193 1587 // email: [email protected] // www.braant.co.uk

A multi-award winning bookkeeping fi rm located throughout the UK servicing hedge funds and other FCA regulated clients. Our technical expertise in Hedge Fund Bookkeeping enables us to provide expertise on internal processes and procedures, and the implementation of systems and bookkeeping management.Services to include but not limited to; Bookkeeping and record management | Daily trade reconciliations across all major TOMS's | VAT facilitation with advice surrounding exempt rules | Management and reconciliation of Client Money Accounts | Capital Adequacy | Cash fl ow analysis | Payroll, dealing with permanent/temporary/contracted employees incl IR35 | Preparation of P&L, Balance Sheet and Cash Flow projections | Full outsourced service on-site and off-site | Preparation of FCA Gabriel returns | Annual Accounts preparation and tax planning to comply with FCA/PRA Capital Adequacy rules | Full year-end audit and advisory services.

AssuredPartners London (APL) // Alex Burton Brown, commercial director // [email protected] // T: +44 (0) 20 7337 6811 // Centennium House, 100 Lower Thames Street, London, EC3R 6DLAssuredPartners London (APL) is a leading insurance broker operating as the London branch of AssuredPartners, the 13th largest broker in the US with a turn-over in excess of $600m. APL began life as three independent and respected insurance brokerage fi rms in London: Baronsmead, Paul Napier and Grosvenor Brokers. As a specialist fi nancial services broker, we represent clients from a cross-section of the asset management industry including start up hedge funds, large institutional managers, private equity managers, family offi ces and portfolio management specialists. Please call us to fi nd out information about our products and how we can help you in a claim. www.apldn.com

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Paul Mifsud, Managing Director // [email protected] // 101 TOWNSQUARE, Ix-Xatt ta’Qui-si-Sana, Sliema SLM 3112T: (+356) 21 33 57 05 // www.sparkasse-bank-malta.com

Sparkasse Bank Malta plc forms part of the Austrian Savings Banks and the Erste Group Bank AG forming part of Austria’s largest banks. From Malta the bank provides private banking and fund custody solutions. As trained private bankers, the bank strives to deliver private, personal and tailored solutions to its fund customers by offering a seamless banking, execution, settlement and custody solution from one account. Fund custody is considered a core service at Spar-kasse Bank Malta plc and the bank avoids all potential confl icts by focusing entirely on what it is they are truly hired to do i.e. – safekeeping, record keeping, monitoring and reporting.

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U.S. Bancorp Fund Services, LLC, Michael Secondo, Senior Vice President // T: +1 866 886 4083 // 461 Fifth Avenue, New York, NY 10017 // www.usbfs.comFor over 45 years, the core of our business model has relied on the passion and experience our professionals bring to the offi ce every day. With extensive industry tenure and knowledge encompassing every type of alternative investment product and strategy – from hedge funds and fund of funds to private equity and liquid alternatives – our professionals’ vision, combined with our sophisticated technology, gives our clients the guidance, resources, and insight into the market they need to be successful. For more information about our comprehensive suite of alternative services, exchange traded funds, or mutual funds, call us at +1 800 300 3863 or visit www.usbfs.com.

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Ade Olopade, Head, Prime Execution Services // [email protected] // Sales T: +65 6226 0300Len White, Head of Sales// [email protected] // UK Sales T: +44 20 7332 0235

Maybank Kim Eng Securities Pte. Ltd (part of Maybank Group, ASEAN's fourth-largest banking group), provides a full prime brokerage service covering securities fi nancing, fi xed-income, synthetic equities and securities lending solutions to newly incubated hedge funds, family offi ces, proprietary traders, and asset man-agers with managed account platforms. Our responsive client-centric prime brokerage service provides our clients with a dedicated execution desk, regional research coverage, and a fl exible and scalable EMS agnostic order management system that is fully integrated into our bespoke suite of reports. Maybank Kim Eng is your ASEAN platform for Global Solutions!

Scotiabank, Stuart Bloomfi eld (London) +44 207 826 5940 // Alfredo D’Onofrio (New York) +1 212 225 6715 // Kirtes Bharti (Singapore) +1 656 305 8356 // Daniel Dorenbush (Toronto) +1 416 863 3991 // email: [email protected] // www.scotiaprimeservices.comScotiabank’s Prime Services group offers a broad range of products including cash and synthetic prime brokerage, securities lending, capital introduction and derivatives solutions. Our team spans across Europe, North America and Asia, providing hedge funds and alternative asset managers with comprehensive transaction experience and local market expertise.Scotiabank is Canada's international bank and a leading fi nancial services provider in North America, Latin America, the Caribbean and Central America, and Asia-Pacifi c. With a team of more than 88,000 employees, we are dedicated to helping our 23 million custom-ers become better off through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets.

Saxo Markets, EMEA – Alexander South / William Hoad, T: +44 (0) 20 7151 2004 // email: [email protected] // ASPAC - Matthew Cartwright, T: +65 9248 7751 // email: [email protected]

Saxo Markets is the institutional division of Saxo Bank Group – Saxo Bank A/S is a fully licensed Danish Bank – our institutional capabilities are built on 23 years of multi-asset FinTech expertise, combining the service, technology and security that hedge funds expect. We offer multi-asset prime brokerage solu-tions to our hedge fund clients - our globally diverse product offering includes Equities/ETFs, CFDs/Swaps, FX, Futures & Options and Bonds across all major markets and venues. Leveraging our sophisticated technology, we deliver a truly integrated experience – multi-product, single account, real-time margin.

MainFirst Affi liated Fund Managers S.A. Bjoern Kogler, Executive Board Member // bjoern.kogler@mainfi rst.com

MainFirst Affi liated Fund Managers S.A . is an independent, owner-managed management company and Alternative Investment Fund Manager headquar-tered in Luxembourg. The company provides a full service offering for the setup, administration and management of funds, funds of funds and managed accounts. It provides substance, governance, compliance as well as risk management support and currently administers 14 fund structures with fund assets of approx. €2.5bn.

Henry Bregstein, global co-chair of Katten’s Financial Services Practice // T: +1 212 940 6615 // F: +1 212 940 3808 // [email protected] Lance A. Zinman, global co-chair of Katten’s Financial Services Practice // T: +1 312 902 5212 // F: +1 312 577 4587 // [email protected] advises many of the world’s premier domestic and offshore hedge funds, commodity pools, and other collective investment vehicles. Both fi rst-time and well-established sponsors come to Katten for guidance on the structuring, formation and documentation of hedge funds. We also advise private fund clients in corporate and fi nancing transactions, including leveraged buyouts, minority investments, public and private exit transactions, recapitalizations, restructurings, and fund formation. Katten attorneys help our investor clients optimize the terms of each investment and prioritize their goals within each fund’s unique framework. Our depth of experience representing both sponsors and investors positions us to respond quickly with practical solutions that move deals forward.

Jack Seibald, Managing Director, Global Co-Head of Prime Brokerage Services // Direct: +1 516 746 5718 // Mobile: +1 516 359 7503 // [email protected] // 599 Lexington Avenue, 21st Floor, New York, NY 10022 // Kevin LoPrimo Managing Director, Head of International Prime Brokerage // [email protected] // Tel: +44 20 7071 7555 // 1 Snowden Street, 11th Floor London EC2A 2DQCowen Prime Services, LCC offers comprehensive brokerage and related services that provide traditional and alternative investment managers with customisable and scalable solutions. We were built by former investment managers to serve hedge fund managers, managed account platforms, institutional investors, family offi ces, and registered investment advisers with turnkey solutions designed to free clients to focus on their core competencies. Our offering features world-class custody and clearing options, multi-asset class capabilities, leading execution and order management systems, a seasoned execution desk, a range of fi nancing options, a highly professional operations and customer support team, comprehensive portfolio reporting capabilities, and capital introduction.

Sean Capstick, Head of Prime Brokerage // T: +44 (0)207 399 9457 // [email protected] Parker, CEO // T: +44 (0)207 399 9450 // [email protected]

Global Prime Partners is a multi-award winning fi nancial services fi rm that provides prime brokerage, execution and clearing services to hedge funds, broker-dealers, asset managers, family offi ces and professional traders. Clients are able to access the global fi nancial markets via its multi-asset class trading platform, which provides trade execution, margin fi nancing, securities lending, clearing and custody services. Global Prime Partners prides itself on providing state-of-the-art technology and an institutional strength operational infrastructure, with a focus on tailored customer service.

Jerry Lees, Chairman, Linear Investments // T: +44 (0) 203 603 9801 // [email protected] Mark Burchell, Global Head of Sales // T: +44 (0) 203 603 9809 // [email protected]

Linear Investments Ltd is a prime broker and award winning FCA incubator supporting multiple hedge fund and broker clients, reducing setup costs and op-erational expenses. With Linear’s aggregated PB relationships we provide leverage, swaps, CFDs, custody and execution (desk & DMA). For capital introduction, Linear provides investment via its B&L Seeder Fund for seed/acceleration capital. In addition, Linear provides outsourced trading, regulatory umbrella, middle & back offi ce, and hedge fund hotel services.

Interactive Brokers, T: +1 855 861 6414 (US toll-free) // 8 Greenwich Offi ce Park, Greenwich, CT 06831 // www.interactivebrokers.com

Interactive Brokers LLC is an automated global electronic broker that caters to fi nancial professionals by offering state-of-the-art trading technology, superior execution capabilities, worldwide electronic access, and sophisticated risk management tools at exceptionally low costs. Interactive Brokers offers complete prime broker solutions, including custody, execution and clearing, and reporting. Innovative trading technology lets you trade on over 100 market centers in 24 countries, and gives you direct market access to stocks, options, futures, forex, bonds, ETFs and CFDs from a single account.

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Lockton Financial Risks, The St Botolph Building, 138 Houndsditch, London EC3A 7AGHenry Keville, T: +44 (0)20 7933 2157 // [email protected] is the world’s largest privately owned, independent insurance broker, which means our focus is on our clients and our people rather than external analysts and institutional shareholders. Lockton truly has a global footprint with over 60 offi ces around the world and more than 4500 employees with more than 15,000 clients. Our award winning specialist division focus exclusively on the asset management industry and our clients range from the largest asset management fi rms in the world right down to numerous start up operations with each and every client receiving the very best service; our clients have a combined AUM of US$10trn. Call us to fi nd out why the team have the highest client retention rate of any other broker.

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Kate Wormald // 23 Hanover Square, London W1S 1JB // T: +44 (0)20 3693 6085

We are a highly respected specialist consultancy providing legal and regulatory services to hedge funds and investment managers.We provide dynamic and proactive assistance in negotiations of all trading documentation.As specialists we do not have the distractions of a wider portfolio and therefore offer, what we believe is, an unrivalled level of service and understanding in the hedge fund arena. As active participants in the hedge fund industry we are closely involved in key industry developments.We pride ourselves on working in the most commercial and effective ways that best fi t with our client’s strategies and objectives.

Adam Phones Ltd //1-3 Dolphin Square, Edensor Road, London W4 2ST // T: +44 (0)20 8742 0101 // Lee Robertson (Sales Director) // email: [email protected] // Alex Phillips (Head of Mobile) // email: [email protected] Phones deliver award winning mobile and high-performance fi xed line connectivity solutions to the alternative investment market. Established in 1987, we are trusted to deliver critical, failsafe communications to over 300 alternative investment fi rms globally. We leverage established relationships with Tier 1 fi xed line and mobile carriers, application developers and equipment manufacturers, carefully integrating selected services to deliver powerful, resilient connectivity solutions. Consultancy, provisioning and management are key elements of the Adam Phones proposition: a proven single contact for design, delivery, contracting and billing, underpinned by 24/7 customer support. Adam Phones also partner with managed IT service providers, collectively delivering connectivity to the fi nance sector.

Charles Square Ltd, 16 Charles Street, Mayfair, London, W1J 5DS // Craig Harris, Director // T: +44 20 3823 4344 // [email protected] // Gareth Broekmann, Director // Tel: +44 20 3823 4343 // [email protected]

Charles Square is an independent IT management consultancy specialising in the fi nancial sector. Covering all of your technology needs, from consultancy through to delivery and monitoring, working with you as your IT partner and not just an outsourced provider. We offer a range of services for you to choose from depending on your needs. This includes but is not limited to our core four offerings; virtual Chief Technology Offi cer / Virtual IT Manager / Virtual Chief Security Offi cer and Technology Support Partner. For more information regarding our services please feel free to visit our website: www.charlessq.co.uk

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Capital Support Ltd, 3 Harbour Exchange Square, Docklands, London, E14 9GE // Carrie Whamond, Executive Director of Sales // T: +44 (0)20 7458 1290 // [email protected] // Marcus Lewis, Director, Technical Sales // T: +44 (0)20 7458 1269 // [email protected] Support, A Six Degrees Group Company is an award winning managed IT services and support provider, and we specialise in providing end-to-end solutions for a large portfolio of global customers. Based in London Docklands and the West End, we have grown steadily since forming in 2002 fuelled by our commitment to innovation and exceptional customer service. Our ethos is to make IT simple for our customers, replacing the burden of high contact IT services with intelligently designed solutions that span from consultancy, design and deployment all the way through to live support. Our vision is to be the most trusted and respected managed IT services provider.

Backstop Solutions // US: Mike Porter, SVP Global Field Operations, Tel: + 1 312 277 7729 // 233 S. Wacker Dr., Suite 3960, Chicago, IL 60606, USA // EU: Craig Rowland, Vice President, Field Operations EMEA, Tel: +44 0203 764 7103 // 25 Berkeley Square, Berkeley Square, London, W1J 6HN, United KingdomBackstop Solutions Group, LLC is an award-winning provider of innovative software solutions to hedge funds, funds of hedge funds, endowments, foundations, pensions, fund administrators, private equity fi rms and family offi ces throughout the United States, Europe and Asia. BSG was founded in 2003 with the goal of creating the industry’s fi rst Software-as-a-Service platform designed to help fi rms in the alternative investment management industry operate effi ciently, invest intelligently and communicate effectively. For more information about Backstop’s product offerings, contact us at: [email protected]

Arkk Solutions // Danielle Cyrus // Head of Business Development // T: +44 0207 036 2751 // [email protected] // 44 - 46 New Inn Yard, London EC2A 3EYSimplify complex reporting requirements with Arkk Solutions. We provide AIFMD and Form PF tools to over 200 Fund Managers globally. Save time by converting your Excel templates into XML and upload directly to the regulator. Edit, convert and validate your documents collaboratively with multi-site access, and link data across reports for faster data aggregation. Live validations provide you with instant feedback, giving you assurance over the accuracy of your data. Our AIFMD tool supports submission to all European jurisdictions, and you can switch between them from within the templates. Find out more about our light, cost effective XML solution.

CYMBA Technologies Ltd, Holland House, 4 Bury Street, London, EC3A 5AW // www.cymba-tech.com // Karim Ali, Managing Partner & Co-Founder, email: [email protected] // T: +44 207 220 6561

CYMBA Technologies is a supplier of business solutions for Asset Management, Multi-Manager, Hedge Funds and Brokerage institutions. The Athena Invest-ment Management Solution provides Multi-Asset class and Multi-Currency Portfolio Modelling, Order Generation, Pre & Post Trade Compliance, Real time P&L, Order and Execution Management functions across the entire Front & Middle Offi ce. To drive further value for its user base, the fi rm also maintains several strategic external partnerships and all of its products are offered as a hosted solution in a secure and private cloud.

Imagineer Technology Group, Erol Dusi, President // [email protected] // Mark Daniel, Principal // [email protected] // T: +1 646 416 5800Imagineer Technology Group is a New York City based software company focused on providing fl exible and scalable solutions to asset managers and alloca-tors. Imagineer’s solutions minimize the time and effort involved in technology, compliance and information infrastructure, allowing investment fi rms to focus on their core competency – investing. Our highly confi gurable software solutions assist our clients in the areas of Client Relationship Management, Client Web Reporting and Fund Research & Portfolio Management.

Eze Castle Integration, Dean Hill, Executive Director // T: +44 (0)207 071 6802 Simon Eyre, Director of Service // T: +44 (0)207 071 6835Interpark House, 7 Down Street, London, W1J 7AJ, email: www.eci.com Eze Castle Integration is the leading provider of IT solutions and private cloud services to more than 650 alternative investment fi rms worldwide, including more than 100 fi rms with $1 billion or more in assets under management. Since 1995, Eze Castle Integration has developed fi nancial vertical-specifi c IT solutions includ-ing infrastructure design and management (both in our Eze Private Cloud and on premise), telecommunications, business continuity planning and disaster recov-ery, archiving, storage, and internet services. These solutions are complemented by a broad service organisation that delivers outsourced IT support, including a 24x7x365 help desk, project and technology management services, consulting services and more. Eze Castle has presence in major fi nancial centres including 8 US offi ces, a Singapore offi ce, and a Hong Kong offi ce in addition to its London offi ce.

Digiterre Communica, Matthew Hirst, Head of Business Development // [email protected] // T: +44 (0)20 7381 7963 Digiterre Communica our world leaders in client management and investor compliance for the fi nancial community. Digiterre’s Communica platform (based around the latest Microsoft Dynamics technology) allows organisations to centralise, categorise and analyse data on clients, fund holdings and fees. With offi ces in New York and London, Digiterre has over one hundred clients globally, including many of the world’s largest banks, hedge funds, asset managers, fund of funds, fund administrators, prime brokers, energy and commodities trading fi rms. We are world leaders in front-offi ce software for the investment management community to centralise what you know automate what you do.

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Harvest Private, (Houston, NYC, Boston), Jeff Dorman, SVP Business Development // [email protected] // T: +1 703 489 6816 // www.hvst.com/info/private

Investor Relations is inefficient, opaque, and plagued by security concerns. A more engaged investor is a stickier one, and more likely to increase alloca-tions. For these reasons increased transparency and demands on due dilligence are growing in importance. Harvest Private offers investment organizations a competitive advantage and tangible ROI through its State-of-the-art technology enabling investment organizations to customize their own private, secure and compliant digital communities for data-rich communication and dissemination.IR

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Alexandra Brown, Business Development Department, T: 0203 167 4625, [email protected] // Seonaid Mackenzie, Managing Partner

AIFM Solutions is a trading name of Sturgeon Ventures LLP who coined the phrase and pioneered the "Regulatory Incubator" in 2001. Sturgeon Ventures began in 1998 as a single family office incubating companies as a VC and focused on financial services incubation from 2000. Sturgeon Ventures is the leading regula-tory hosting/FCA Umbrella in the UK for alternative funds. AIFM Solutions is an educational website for all those in the alternative fund industry who would like to both contribute and learn about the never ending changes in the industry, for both EU and Non EU Managers. AIFM Solutions will pass enquiries not jut to Sturgeon Ventures, but also to lawyers, administrators, prime brokers that can assist a project in all jurisdictions. More information at either website www.aifmsolutions.com or www.sturgeonventures.com. Alex Brown is happy to arrange meetings with members of the team.AI

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Darren Gordois & Peter Peacock // T: +44 (0) 20 3137 8140 // [email protected] or [email protected] // www.mondrian-alpha.com // 5 London Wall Buildings, London, EC2M 5NS

Mondrian Alpha Recruitment Solutions provides innovative human capital solutions & research, market intelligence and competitor analysis to ourclients. Our hedge fund coverage includes: portfolio managers & analysts, sales & marketing, trading and infrastructure (operations, finance, legal & compli-ance). We pride ourselves on delivering complete, targeted and fast execution across our product suite. Please call in or email us to discuss your requirements.

RFA, US: Gair Betts, Director of Sales // T: +1 212 867 4600 // 330 Madison Avenue, 19th Floor, New York NY 10017 UK: George Ralph, Manag-ing Director // T: + 44 207 093 5010 // 52 Brook Street, London W1K 5DSRFA has been the trusted technology partner to our clients for more than twenty five years. Offering a full range of technology solutions with global data centeroperations, RFA serves the IT needs of businesses including hedge funds, private equity funds, fund of funds, private wealth management and alternativeasset management firms. Whether clients require on-site or cloud-based solutions, telephony or data systems, fully-managed IT or project management,RFA has the expertise to meet the industry-specific needs of our clients. RFA is headquartered in New York City with operations in New York, Connecticut,Boston, MA, and London. Website: www.rfa.com

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Tancroft Communications, Sarah Rich, [email protected] // 0207 557 9811 // 48a Monmouth Street, Covent Garden, London, WC2H 9EP

We take the ‘tech’ out of technology, to leave our clients to focus on what they do best, growing their business. And in exchange we offer them simple solutions… Solutions that save time and money.Based in the heart of London’s West End ideally places Tancroft to work with some of the UK’s most successful hedge funds.

Tribeca Technology LTD, Mark Instance, MD // T: +44 (0) 8000 122 225 // [email protected] // www.tribeca-it.com // 1 Berkeley Street, London W1J 8DJ

Tribeca Technology, founded in 2006, is a provider of exceptionally high quality IT support services to the alternative investment industry. Our products are tailored to each individual client and include private cloud services, infrastructure management, IT security, telephony and BCP to name but a few. Critical system monitoring, rapid onsite response and helpdesk IT support is provided 24/7/364 via our offices in London, New York and Hong Kong. Tribeca’s products and services are constantly evolving to address changes in the financial services industry and to offer the very latest developments in technology, all to the advantage of our clients.

Satuit Technologies // Europe, Middle East & Asia: Alan Underdown, Managing Director – EMEA // Tel: +44 (0) 20 3514 3296 // [email protected] // Eastern U.S. & Canada: Chet Hayman, SVP Sales // Western U.S. & Canada: Mike Melis, Regional Director Sales // Tel: +1 781 871 7788 // email: [email protected] Technologies is a leading provider of customer relationship management (CRM), Investor Portal and Client Report Automation (CRA) software solutions. We have 22 years of experience as a trusted provider to the buy side and now help hundreds of clients including hedge funds, asset managers, fund-of-funds, private equity firms and family offices. Our software is used by professionals in sales, marketing and investor relations as well as in compliance, client support and finance. For more information, please contact us at [email protected].

SmartStream, Nathan Gee, Marketing Manager, T: +44 (0) 20 7898 0630

SmartStream is a Global software and managed services provider that in challenging markets conditions has outpaced its rivals in the financial markets sector, creating an impressive base of more than 1,500 customers. At the heart of this success is the ability to react to client, market and regulatory changes through innovative solutions for the middle and back-office. That is why, even in challenging market conditions, the company continues to invest more than 20% of revenue back into research and development. The combination of SmartStream’s post-trade processing solutions, together with its unique Data Management Services, creates a real-time and pre-emptive approach to reducing trade failures while also accelerating and automating trade processes.

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Matsco Solutions Group, Suite 26, 2 Station Court, Imperial Wharf, London SW6 2PY // www.matscosolutions.comJim Serpi - London // T: +44 (0) 20 7821 4950 // [email protected] Matsco Solutions Group, established in 2002, is the trusted IT support partner for hundreds of hedge funds and alternative investment firms across Europe, the United States and Asia. Specialising in hedge fund technology, Matsco Solutions provide best-of-breed industry solutions to its clients including private cloud services, business continuity planning, specialist start-up services, technology design, support and monitoring, virtual CTO services and a 24/7 engineer staffed helpdesk. The company was co-founded by Patrick Ferrall and Jim Serpi, who bring a wealth of industry experience, and has offices in London, New York, Stamford, San Francisco Bay, Hong Kong, Singapore and Beijing.

netConsult Ltd, Holden House, 57 Rathbone Place, London, W1T 1JU // T: +44 (0)20 7100 3310 // F: +44 (0)870 318 3126 // www.netconsult.co.uk // David Mansfield, COO // T: +44 (0)20 7100 3310 // [email protected] // Laura Zverko, CMO // T: +44 (0)20 7100 3310 // [email protected] // Established in 2002, netConsult is an award winning provider of managed IT Services to the global alternative investment industry. We aim to provide a high level of technical expertise to our clients combined with a dedication to customer service. Our ethos is based upon designing secure IT platforms which are manageable over the long term. We are a trusted technology provider to a large portfolio of clients ranging from small start ups to large global funds. netCon-sult provides a bespoke service to its clients and provides a full suite of IT services including cloud services, outsourced IT, BCP, virtual CTO and IT security.

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David Ross, global head of marketing // T: +1 732 318 7109 // [email protected] // Jonathan White, business development USA // T: +1 646-861-3409 // [email protected] // Ranjan Mishra, business development UK T: +44 (0)20 7016 9170 // [email protected] // Bangalore T: +91 80 30982200 // Mumbai T: +91 022 30952200Tailored for each manager’s specifi c requirements, our Best Thinking and Best Practices help managers grow. We offer customised straight-through-processing and integrate post-trade operations across virtually every asset class, currency, border, or structure you can imagine. We offer a full range of shadow-accounting, middle- and back-offi ce professional services for investment managers. Our deep operational and accounting expertise backed by state of art technology enables a high degree of control via automation in a 24 hour, 6 days a week global delivery model. The result is a new level of scalability and fl exibility to help you grow – whether you're focused on gathering assets, developing new strategies or entering new markets. Visit www.viteos.com for more information, call or email us.

Abide Financial Ltd T: +44 (0) 20 7148 0971 // sales@abide-fi nancial.com // 2nd Floor, St. Mary le Bow House, 54 Bow Lane, London, EC4M 9DJ

The market leader in global regulatory reporting solutions, Abide Financial manages transaction reporting for fi nancial and non-fi nancial counterparties in UK, Europe and beyond to help market participants meet MiFID, MiFID 2, EMIR, REMIT and international reporting obligations. Since 2011, the fi rm has delivered proven technology and consultancy solutions to banks, brokerage houses, asset managers, retail trading execution platforms and hedge funds. Website: www.abide-fi nancial.com

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T One Ten Associates 1 Berkeley Street, London, W1J 8DJContact: Mush Ali (ACA), Director // T: +44 (0)20 7016 9910 // [email protected]

One Ten Associates is a specialist recruitment fi rm that services the permanent and temporary needs of the alternative/fund management sector. Our consultants have been in this sector for over ten years and have the network to cover your strategic senior hires as well the junior to mid-senior needs.

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NTS Robert Quinn // Robert Quinn, Managing Director // email: [email protected] // 42 Wigmore Street, 3rd fl oor, London W1U 2RY //

www.robertquinn.co.uk // T: +44 (0)207 9589127

Robert Quinn Consulting is a London-based premier fi nancial compliance consultancy. We specialise in integrated FCA and SEC compliance programmes and both UK and US fi nancial regulatory compliance to insitutional and asset management clients worldwide. Robert Quinn Consulting was founded in 2007 with the goal of providing pragmatic guidance and responsive customer service to our clients. Our dedicated team allows us to be a focused resource contributing to your success.

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HUGO FUND SERVICES - Swiss Representative // Colin Vidal // T:+41 22 707 41 95 // email: [email protected] // www.hugofunds.ch

HUGO FUND SERVICES is a Geneva-based Swiss representative for funds distributing to qualifi ed investors in Switzerland. We focus on servicing alternative invest-ment funds globally. Hugo’s team is comprised of senior professionals from the hedge fund and private equity industries. Through our proprietary online platform we are able to offer a simple, effi cient and cost effective solution to funds.

Cordium // London (headquarters), NY, Boston, SF, HK // UK: Sarah Donnelly // T: +44 (0) 203 141 9658 // [email protected] // USA: Hannah Weinstock Gallagher // T: + 1 212 515 2800 // [email protected] // HK: Derek McGibney // T: +852 3478 7378 // [email protected] // www.cordium.comCordium is the leading global provider of regulatory compliance consulting, accounting and tax services and software to the asset management and securities industry. Today, Cordium has offi ces in London, New York, Boston, San Francisco, Malta and Hong Kong and employs more than 200 experienced professionals who support more than 1,500 investment businesses. Our clients range from start-ups to large fi rms with well-established track records. Our asset manage-ment and securities sector focus means we always bring direct, relevant experience to advising our clients, helping them to meet their compliance and regulatory challenges and turning regulatory compliance into a must-have business advantage.

Complymatic, T: +44 (0) 203 603 9809 // [email protected]

Complymatic is here to deliver the highest grade of compliance for fi nancial service providers. Highest grade for us means exceeding the requirements of the regulations; adding true value to fi nancial service providers; and delivered using modern methods. Our offering includes regulatory hosting in the UK, compli-ance outsourcing, compliance assurance, and projects & consulting. We dislike lip service and are allergic to waste. For more information, please visit www.complymatic.com

Pioneer Underwriters // Richard Coello T: +44 207 374 5178 // [email protected] // Simon Holt T:+44 207 480 0287 // [email protected] // www.pioneeruw.com/pioneerfi nancialinstitutions.html

2016 HFM Week Insurance Underwriter of the Year, Pioneer Underwriters is a leading asset management insurance specialist, providing bespoke insurance solutions for asset management fi rms across the globe. Offering professional indemnity, directors and offi cers, crime and cyber insurance products with capacity of £10m / €10m or US$15m (rated A+ by S&P), we deliver unparalleled service and products that are tailored to meet local and international regulatory requirements, such as those found in the EU's Alternative Investment Fund Managers Directive (AIFMD).

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John Dexter, Senior Development Underwriter, Financial Institutions, Exchequer Court, 33 St Mary Axe, London, EC3A 8AG // T: +44 (0)20 3207 6576 // [email protected]

Offering a range of market leading fund management insurance products to clients that include many of the world’s leading hedge funds and their managers, Travel-ers boasts an AA (stable) rating from Standard & Poor’s (January 2015). An expert team of qualifi ed underwriters and a highly experienced in-house claims team ensure that clients can expect the very best service, claims representation and risk management guidance across the lifetime of their policy. It’s this powerful combination of experience, market insight and fi nancial strength that makes us a leading insurer in this fi eld, a position of which we are proud. www.travelers.co.uk/fi IN

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World First, Daniel Ross daniel.ross@worldfi rst.com // T: 020 7326 9121

World First is a market leading, award winning, payments and risk management company. Where companies have FX exposure, World First can help. Whether that’s a fund looking to protect their future valuations, a fi rm looking to cut risk associated with their operational costs or an established organisation looking for a partner to offer a cross-border payments facility to its clients.

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Mark Burchell, Global Head of Sales, Linear Investments Limited // T: +44 (0) 203 603 9809 // [email protected] // [email protected]

Specialised trading desks for fi nancial professionals within our fully serviced offi ces in Victoria, London. Flexible fees and terms enable managers to reduce setup costs and operational expenses whilst accelerating time to market with in-place infrastructure. Continuous investment keeps you at the forefront of technological and compliance requirements in IT, Data, Communication and Connectivity. For more information, visit www.linearinvestment .com/hedge-fund-hotelH

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Richard Lilley, Managing Partner, Linear Outsourced Trading // T: +44 (0) 203 603 9827 // [email protected] Paul Walker-Duncalf, Managing Partner, Linear Outsourced Trading // T: +44 (0) 203 051 7222 // [email protected] Linear Outsourced Trading is managed by senior professionals with extensive buy and sell-side experience and can eliminate the fi xed cost associated with an in-house dealing desk while offering highly competitive rates only when you trade. We offer expertise across asset classes to improve execu-tion quality, remove the distraction of trading allowing portfolio managers to focus on adding alpha, signifi cantly reduce operational risk and comply with regulation by demonstrably separating trading from portfolio management . Linear can also offer dealing cover. Supported by the latest technol-ogy, we can provide in house middle and back offi ce, CSA capabilities and TCA at no incremental cost . Linear accesses a wide range of counterparties, providing a bespoke trading service that will feel like an extension of your own fi rm.O

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Mr. Richard Anthony, Head of Listed Equity Options // T: +1 646 346 7052; email: [email protected] Mr. David Bunt, Head of Sales // T: +1 646 346 7052; email: [email protected] BGC Financial is an industry leader in creating customized solutions using Listed Equity Options for institutional portfolio managers to achieve an articulated goal or viewpoint . Clients utilize a bespoke proprietary process created by Mr. Richard Anthony honed across a variety of market conditions. Positions are reviewed and optimized over time with the goal to improve the structure’s unit of reward per unit of risk . Strategies include directional, hedging, market neutral, volatility and multi-asset class across individual names (long/short), ETFs, pair trading, global commodities and indices. Call for more information.EQ

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Societe Generale is a French credit institution (bank) authorised and supervised by the European Central Bank (ECB) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR) (the French Prudential Control and Resolution Authority) and regulated by the Autorité des marchés financiers (the French financial markets regulator) (AMF). Societe Generale, London Branch is authorised by the ECB, the ACPR and the Prudential Regulation Authority (PRA) and subject to limited regulation by the Financial Conduct Authority (FCA) and the PRA. Details about the extent of our authorisation, supervision and regulation by the above mentioned authorities are available from us on request. © Getty Images - FF GROUP

INVESTMENT BANKS 07 HOW MAINLAND ASSETS … · Paulson and Co. 13 Pelham Capital 3 Rhodium Capital...

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