Category: Funds

Fund Manager Elite 2016

Fund Manager Elite 2016

Wise Investment, founded in 1992, is an independent investment company based in Chipping Norton, Oxfordshire. We got in touch with John Newton at Wise to find out more about the company and to hear his thoughts on winning this award.

Wise Investment has two complementary businesses. One advises private clients on investment and wealth management. The other manages investment funds through an OEIC. The funds business is run by two teams. The Evenlode team manages Evenlode Income, and is working on a new Evenlode global fund which is due to be launched next year. The Wise Funds, TB Wise Investment & TB Wise Income, are managed by Tony Yarrow, who heads up the Wise funds team. The Wise OEIC has funds under management of around £900m.

The Wise funds are marketed by John Newton, working in the Wise Funds team.

The fund that has won the award is TB Wise Income.

TB Wise Income has three aims:
– to provide investors with an attractive starting dividend yield, currently 5.6% net,
– to increase the income by the rate of inflation or better,
– and to grow the capital value of the fund at the rate of inflation
  or better.

Over a long period of time, we believe that the best way to provide a growing income for investors is by holding a carefully-selected portfolio of shares in medium-sized and smaller companies, and to complement this portfolio with a diverse range of higher-yielding, lower-volatility assets, including fixed interest, commercial property, cash and alternatives.

We alter the proportions we hold in the different asset classes according to where we see the best value, and the most robust income streams. Our process is focused around the production of reliable income, and we are proud of the fact that investors who joined the fund at launch, a little over ten years ago, have received over half their starting capital in income payments over that period, as well as making capital gains.

TB Wise Income invests ethically, and we are exploring the possibility of having it accredited as an ethical fund.

Investment markets have been challenging during TB Wise Income’s first decade, and we have risen to the challenges we have been presented with. Our aim as we go forward is to continue offering our investors an attractive, reliable and growing income in all market conditions, using the wide range of asset types that are available through our mandate.

Investing in a post-Brexit World
FundsReal Estate

Investing in a post-Brexit World

The quicker-than-expected formation of a new government in the UK, and the surprise decision by Mark Carney at the Bank of England to hold interest rates at current levels, have helped settle nerves in the market to some extent. Likewise, investors have been buoyed by better than expected financial data from the Bank of England. But despite the positives, there remains a great deal of work to be done and the question now being asked is: what is Brexit anyway?

It is not just leaders in the EU who want an answer sooner rather than later. Investors too need certainty if confidence is to be maintained in the financial health of the UK and the EU.

And, with the UK already having lost its AAA credit rating, and UK banks being downgraded by Moody’s over fears about Brexit exposure, the economy is far from out of the woods and pressure is building on the new government.

So, where should a savvy investor be looking in the post-Brexit world? And how are property investments likely to fare, when compared to other asset classes?

Real estate, real returns?
The key advice for investors watching the Brexit drama unfold – and spooked by talk of possible referendums in France (Frexit) and the Netherlands (Nexit) – is that now is the time to diversify. Concerns over the economic implications of Brexit have already sent many investors to traditional investment ‘safe-havens’. The price of gold for example rocketed on the back of the UK’s decision to leave the EU, and has remained high since. Likewise the value of the dollar, despite taking a hit in the immediate aftermath of Brexit has since recovered strongly. And with firms like Microsoft and Morgan Stanley posting better than expected results in July, the S&P 500 and Dow Jones industrials have been driven to fresh heights recently.

So, could investing ‘over the pond’ be a solution for those concerned about Europe’s prospects?

There are definite returns to be had in the US. The Rycal Group, currently offering Carlton James investments which specialise in the development of new hospitality real estate in high demand areas, could be just the kind of investment opportunity for those looking to hedge against uncertainty in Europe.

As Simon Calton, CEO of the Carlton James Sky Watch Inn Group and Rycal Group, says, “During the referendum campaign much was made about the size of the market in the EU – an economy of some 550 million consumers. Let’s not forget though, that in the US consumers spent around $11,372 billion in Q1 20161 alone, a huge market for those willing to look beyond Europe.”

Carlton James Sky Watch Inn Group holds an investment portfolio focused on the hospitality sector in the US. It has recognised the potential of the US market for many years, and used it to deliver returns for investors averaging 17% for the last five years.

So how is this being achieved?
Carlton James has made an art of finding the real estate and hospitality opportunities that yield. Not only taking local economies into account, they also look for additional Revenue Generators such as proximity to highways, malls and other economic infrastructure.

Calton continues; “At Carlton James we understand that crisis and opportunity are just opposite faces of the same coin. The key to investing successfully is diversification, so if things are unravelling in Europe, make sure you have a stake in the US.

“Because we have pursued a policy of diversification, and built clear exit strategies into all our opportunities to mitigate risk, we can offer a real alternative during these uncertain times.

“And in spite of uncertainty in the wider economy, real estate remains a solid investment. Even in the UK, the gloomiest predictions about loss of property value pale in comparison to the loss of value on the FTSE 100 and 250 following the vote to leave the EU. And with real estate experts2 predicting Brexit could drive demand for US real estate – now would be the time to invest and get ahead of the crowd.”

For more information on Carlton James investments please visit


FCA Launches call for Input on Crowdfunding Rules

FCA Launches call for Input on Crowdfunding Rules

In 2015 an estimated £2.7 billion was invested on regulated crowdfunding platforms, up from £500 million in 2013, with more than 100 platforms either operating in the market or seeking authorisation. The FCA introduced rules for the regulation of crowdfunding platforms in March 2014 and committed at the time to a full review of their impact.

Christopher Woolard, director of strategy and competition at the FCA said:

“The crowdfunding market is an innovative and growing sector and one which we see as part of promoting effective competition. We introduced rules in 2014 to ensure consumers were protected without preventing the market from enhancing competition through expansion and innovation.

“Since then the market has grown rapidly and we want to explore concerns that have been expressed about developments in some aspects of the market. We believe now is the right time to consider whether our requirements remain appropriate and that we have the right rules to support the development of this dynamic market by ensuring consumers are adequately protected.”

In its call for input the FCA is seeking views on a number of issues related to loan-based crowdfunding including:
– Considering whether financial promotions, due diligence and prudential standards are still appropriate for the way the market has developed;
– Whether to mandate in greater detail the disclosure firms are expected to give consumers and the time that the disclosures must be provided;
– Whether platforms should be required to assess investor knowledge or experience of the risks involved in this type of investment.

The FCA are also interested in comments on the effect on competition of the growth of loan-based crowd funding.

The FCA is also seeking views on its regulation of investment-based crowdfunding including:
– How conflicts of interest are managed on these types of platform;
– Whether the due diligence rules for platforms need to be strengthened;
– Whether to mandate the disclosure of risk warnings in relation to non-readily realisable securities (such as unlisted equities) held within Innovative Finance ISAs.

The call for input also signals the FCA’s intention to consult on applying the usual mortgage lending standards to Peer-to-Peer (P2P) platforms in order to give consumers the full benefit of these protections.

The FCA is asking for responses to its Call for Input by 8 September 2016.


Challenges Facing Hedge Fund Start-ups

Challenges Facing Hedge Fund Start-ups

For a hedge fund, attracting investors early on and as the fund seeks to grow is crucial to success. Without a strong and growing base of assets, a hedge fund may have challenges fully and successfully executing its investment strategies. Institutional investors and their consultants continue to show interest in hedge funds and thus represent a huge opportunity for new hedge funds to grow their AUM. But what are the best ways to attract these investors and consultants?

One way is by ensuring industry databases like eVestment are updated with as much data as possible from a hedge fund’s inception and going forward because increasingly big institutional investors are using databases to search for managers to whom they will consider awarding investment mandates.

eVestment’s clients are institutional investment consultants and institutional investors – like pension funds, insurance companies, foundations, endowments and sovereign wealth funds — and the asset and hedge fund managers that invest money on their behalf. On the traditional, long-only side, asset managers have long shared a wide variety of data with eVestment to ensure their products are visible to consultants and investors when they look to award new investment mandates. As institutional investors and their consultants have become more interested in hedge funds, they are seeking similar levels of transparency and data as they search for hedge funds to consider investing with. So for a new fund looking to attract investors – and institutional investors have billions to invest – being in a database like eVestment is crucial to asset raising success.

Investors are increasingly looking for more than just returns when they search for hedge funds, which can be a plus for the hedge funds that are starting out and may not have a very strong returns story right out of the gate. Of course returns are and will always be an important part of the story. But investors, when they are searching for managers and vehicles with which to invest, are looking for other things as well.

Because institutional investors seek to have balanced portfolios, they are frequently looking for new investments opportunities that compliment or balance their existing investments. So they may be looking for a fund with a specific investment focus, style or geographic focus that is missing from their portfolio. Additionally, many institutional investors have diversity mandates in their investments, so an investor may be looking for a fund that is fully or partially owned by a woman or a member of a minority group. Perhaps there are schools that are known for turning out successful hedge fund managers. Investors may be looking for hedge funds with key professionals who attended those schools. So, as an example, a pension fund may be looking for a hedge fund with X% returns, partially owned by a woman, based in London, with an activist strategy and key professionals that attended a short list of top universities.

If a new hedge fund happens to fit these criteria but isn’t in an industry database – or is in the database but their profile is missing one or more of the criteria the investor is searching for – they simply won’t be found. So for the hedge fund starting out, it’s crucial to create and keep updated profiles in databases like eVestment and to make sure those profiles are updated as completely as possible. eVestment continues to work with hedge funds so they understand the importance of transparency and populating databases as they seek to build their funds and attract new assets.

We continue to add new data fields at the request of our investor and consultant clients who tell us what kind of data they would like to see while they screen and search for fund managers. We have found that over time hedge fund managers have become more interested in transparency as they understand that such transparency is the first step to attracting large mandates from these institutional investors.

By being in an industry database like eVestment, new hedge funds have the ability to be searched for and found by investors. If new funds are not in these databases, these funds are essentially invisible and don’t exist to big investors who increasingly are using databases as their first and sometimes only source for finding new managers and new investment vehicles.

Company: eVestment
Name: Christophe Frèrebeau,
Director, Head of Europe, Middle East and Asia
Web Address:
Address: 2nd Floor, 60 Fenchurch Street, London EC3M 4AD,
United Kingdom
Telephone: +44 (0) 20 7651 0800

Real Estate Fund Manager of the Month - Luxembourg
FundsReal Estate

Real Estate Fund Manager of the Month – Luxembourg

Advanced Capital Group manages four generalist Private Equity Fund of Funds: ACI, ACII, ACIII and ACIV, and additionally manages funds in the Opportunistic Real Estate and Traditional Energy sectors. This increasingly global portfolio of investments reflects the firm’s intention and ability to take advantage of investment opportunities worldwide.

“Advanced Capital is an investment firm that strives to serve its investors by prudently guiding part of their capital towards areas and sectors which, by and large, are not yet in the mainstream of an investor’s attention. Fundamentally, it’s why we are unique” writes Robert Tomei Chairman of Advanced Capital Group on the company’s website.

“As global investors our professionals predominantly spend their time gathering high-grade, real-time intelligence on geopolitical, economic, capital market and sector trends to assess relative value amongst a wide range of investments within the private market universe” he adds. On the firm’s approach to investments, the Chairman adds, “By no means a straightforward process, we are constantly vigilant of markets and conduct our own self-assessment. A depersonalised, rigorous approach which stimulates independent, intellectual debate together with a focus on thorough quantitative and qualitative analytical support, lies at the heart of our success, as is fostering a vested and highly motivated team. It is our conviction that other factors of our success are driven by sound governance and a culture based on transparency and integrity.”

Corporate Social Responsibility Advanced Capital is driven by the belief that socially responsible investing and the consideration of the wider impacts of business is a core pillar in the guardianship of assets in today’s society as well as generally being good business, concerning their four generalist funds. As such, values and activities are enshrined in their approach to the wider global milieu in which we sit. They see this as an integral driver of the firm’s success over the last 14 years.

Advanced Capital are committed to maintaining the highest standards of probity in all their activities with all stakeholders, investors, managers, colleagues, regulatory bodies, the private equity industry and the wider community as a whole. Reflecting the firm’s commitment to build sustainable investments, we adhered to United Nations Principles for Responsible Investment (UNPRI), the framework which allows us to further incorporate environmental, social and governance issues into their investment process. They are also proud and committed supporters of the globally renowned charity Oxfam in its fight against poverty and injustice worldwide and members of the Aspen Institute, the reference organisation for the encouragement of enlightened leaderships.

Maintaining a very close relationship with their investors is very important to us; their goals are at the heart of the firm’s strategy. To this end, Advanced Capital provide them and other stakeholders with continual disclosure around the firm’s portfolio investments, structure and operations and demonstrate how they work to create long-term sustainable value.

As part of this landscape, Advanced Capital endorse the Private Equity Principles of the Institutional Limited Partners Association (ILPA), the leading private equity investors’ organisation which encompasses the largest most sophisticated investors in the world.

Above all, ILPA recognises the need to establish best practices among investors and their investments managers. Its principles of transparency, governance and alignment of interest have been accurately developed with the wider goal to improve the long-term benefit of the private equity industry as a whole. Ensuring that Advanced Capital stay at the forefront of developments in global international affairs and in the latest macroeconomic trends, they support The Royal Institute of International Affairs (Chatham House), a world-leading multi-rewarded Think Tank. Meanwhile, their memberships of the Italian Private Equity and Venture Capital Association (AIFI) and European Private Equity and Venture Capital Association (EVCA) allow Advanced Capital to always keep a state-of-art domain within the private equity industry.

Private Equity Fund of Funds Since its launch, Advanced Capital’s Private Equity Fund of Funds has invested exclusively with specific, targeted, leading international managers, ensuring consistently high returns based on an appropriate level of market risk.

Advanced Capital’s prides itself on being an early mover, allocating a significant portion of its funds towards counter-cyclical distressed and debt strategies in anticipation of a market correction.


Advanced Capital Energy Fund (ACEF) is a global Private Equity Fund of Funds targeting the on-going reshaping of the energy and power industrial landscapes.

The fund explores buyout, growth and restructuring opportunities within the energy markets globally through investments in a number of leading funds across the traditional and alternative energy sectors.

Real Estate Investments

Focussing on one aspect of the work, we now take a look at Real Estate sector which is encompassed by the hard work of the firm’s Seth M. Lieberman, Chief Investment Officer for AC Private Equity Real Estate. Fittingly awarded Real Estate Fund Manager of the Month, Seth certainly boasts an impressive 32 years of industry experience in both the US and in Europe. Indeed, Seth has a wide range of industry experience ranging from business development, senior and mezzanine finance, and equity investments, to restructuring of distressed properties and debt.

Lieberman has held senior positions with UBS Investment Bank (MD), Hypo Real Estate (Joint MD), Lehman Brothers International (ED), Credit Suisse Praedium Funds (Principal) & GE Capital (Director). In addition, he has earned a B.A. in Economics (Cum Laude) from Tufts University and is a member of the Urban Land Institute Europe Executive Committee, its Advisory Board and ULI Global Audit Committee. Mr Lieberman is a board member of Kvalitena AB.

The Advanced Capital Private Equity Real Estate International Fund (AC PERE) is a Real Estate Fund with a global perspective and a focus on opportunistic and distressed debt real estate assets. AC PERE aims to capitalise on illiquid market conditions and primarily invest in distressed property and property debt investments, to deliver superior risk-adjusted returns.

Ending this article on a positive note, the last word goes to the Robert Tomei, Chairman of Advanced Capital Group, “Advanced Capital’s consistently successful track record of 14 years has placed us amongst the best performing managers in the business. Their flexible, value-oriented approach has reduced exposure to exuberant valuations and takes advantage of excessive pessimism or relatively neglected areas of opportunity. This is underpinned by the firm’s fundamental commitment to outperform markets while preserving principal”.

For further information, please contact:
Company: Advanced Capital SGR S.p.A.
Name: Seth M. Lieberman, CIO Real Estate Investments
Email: [email protected]
Web Address:
Address: Via della Spiga 30, 20121 Milano, Italy
Telephone: +39 (02) 3031771

Private Equity Fund Manager of the Year - UK

Private Equity Fund Manager of the Year – UK

Before Privet I was at Deloitte for nine years doing insolvency and restructuring, then 10 years at 3i. This combination of investing and operational experience lead me to set up Privet in 2008. Last year was a really positive one for us with two very interesting investments, both in the manufacturing sector which we know well. Both were strong businesses but with challenges in strategic focus and management. Both also had historic pension problems.

These are just the sorts of things we look for. We like to get stuck in to the operational detail of businesses – our style is very hands on. That’s a bit of a cliché these days but, as one investor said to me the other day, there aren’t many PE firms that really do it – we do, with the Privet team spending 2-3 days per week with our businesses in the early days. Breaking down a business into its core components and assessing what they do well and what they could improve on is key. Bringing the team and the overall business together to identify solutions to any problems is vital. Although our management style is quite challenging it’s also very transparent. In order to understand how to make businesses better we can ask hard questions but in a sense there are no right answers as such, which seems to be quite a refreshing approach for many management teams!

It has been interesting watching the private equity market continue to evolve over the last few years as the players move around in a fairly Darwinian way. Investors are now looking for more clear value propositions rather than just buying a business and making money through financial engineering. In a very competitive market you need to be seen doing something different, in a sense going back to private equity roots can help you stand out from the crowd as you look to make good money by genuinely improving businesses. The credit market has also been interesting, with a real polarisation in availability. Really good businesses can get great gearing, and the bottom end has a broader range of specialists now. But the mediocre businesses struggle.

In terms of technological developments they seem to be occurring faster and faster. I’ve been fascinated by the recent headlines around robots taking people’s jobs. I think it is over-played, but there is a real change we will need to adapt to, albeit gradually. It is our hope this will continue to evolve in a positive way and provide an opportunity to create something new or a new way of looking at something.

Within the businesses we’ve invested in, Aeromet for example as a small UK manufacturing business has developed a fantastic new alloy technology which will effectively pave the way for our growth over the next few years. Similarly with the defence optical products business we have, new product development is key to keeping our customers engaged. Technology can be quite risky, not everything will work, risks and opportunities need to be carefully considered. If you don’t keep track of technology you will, though, be left behind.

We were please to get this award – it is always nice to get some recognition for some of the good stuff we do. At present this is a very good place to be. Going forward, we are looking to identify similarly interesting businesses which will enable us to be very much ‘hands on’. Taking a business to a completely different level where we can make a difference is what we are all about. Buying a business which already has steady growth isn’t for us, we are looking to apply our skills and experience to more challenging situations.

Company: Privet Capital LLP
Name: Stephen Keating
Email: [email protected]
Web Address:
Address: 4 Duke Street Mansions, 70 Duke Street, London, W1K 6JX
Telephone: 44 20 719 33382

60 Seconds with SCM Direct

60 Seconds with SCM Direct

As innovative online investment managers, we offer clients direct low cost access to high end wealth management that is smart, commonsense and modern. Everything we do is underpinned by 100% transparency and treating our clients fairly.

Who are your clients?

Generally speaking they are Investors looking to bypass expensive advisers, layers of inefficiencies, and high fee underperforming traditional active funds. For UK clients our entry level is £15,000, either direct or via an ISA or SIPP wrapper. For overseas clients £150,000 or the equivalent in Euros or US Dollars. We are also delighted to work with corporates and charities.

What makes your firm unique?

As a boutique firm, the founders not only invest significant sums of their own money alongside clients on exactly the same terms and fees but also roll their sleeves up and are fully involved in every aspect of the organisation. Clients can, therefore, be confident their money is being looked after as if it were our own.

In terms of investing, our Chief Investment Officer (CIO) is one of a handful of highly respected fund managers. His 28 years’ unique track record has resulted from managing money for a wide range of clients – retail, institutional and private – across a wide range of asset classes – equities, property, fixed interest and alternative assets.

At this moment in time, we are also the only investment house that publishes our true Total Cost of Investing on our factsheets monthly, in one number – no hidden fees whatsoever!

What are the biggest challenges facing your firm at present?

As a disruptive brand we face several challenges. To compete with the deep pockets of big brand incumbents, to continue to provide exceptional service to clients whilst growing but not compromising efficiency and ethics, as well as resisting the tempting offers of external finance which would impact our principles, ethos and customer care.

What is the main aim for your business?

It is two-fold. To continue to help people to save for their future so they live the end of their days with finances that affords them dignity and security. To be successful and profitable so that profits feed into our Foundation – – which will ensure we can continue being philanthropists and help heal communities.


Hedge Fund Manager of the Month - Vanuatu

Hedge Fund Manager of the Month – Vanuatu

Up until the GFC I thought investing was relatively easy: simply pick the next up and coming emerging market fund from Russia, China or India, throw in some main stream market equites, some bonds, some futures and maybe even an arbitrage fund, take a long term buy and hold approach and based on past performance, you were set.

Unfortunately, the value of a good fund manager isn’t really evident until everything turns to custard. Up until late 2007, virtually every fund manager was a genius as they kept making money for their clients ……..until they didn’t. That’s when I learnt the hard truth that you could only find which fund manager was actually worth their salt in a downturn and no, the fact that you lost less than everyone else did not necessary make you a good fund manager. In truth, most failed the task miserably.

So I lay awake at night in a cold sweat, wondering what I could have done differently, with that same thought churning over and over in my mind “Forget the Market”! Seriously, I wanted nothing more than to get rid of that lump in my throat. To get out from under that elephant sitting on my chest as I went into the office.

Could it really be that simple? Was there really another way to invest? What if you could generate returns similar to the long-term market averages but without investing in the market? Was it even possible to contemplate such a crazy idea?

So I set out to examine every type of investment strategy I could find, to see what worked and also dug into what didn’t work and why. My mission was simple: to create an investment strategy that could match the market long term averages but not be at the mercy of them. One in which my friends, family and clients (that were still speaking to me), could invest in without sleepless nights and avoid these horrific market drops. It seemed really simple. All I had to do was not lose money so that any profits generated weren’t wasted on trying to claw back past losses. Oh, and I wanted it be capital secured too.

Honestly, there was no point doing what everyone else was doing because then we would just end up in crowded trades and eventually, if history was any guide, we would wind up going through another massive downturn. After all, Wall Street had already lost over 45% of the typical investor’s money TWICE over the past 17 years. And if you lose 45% you need a gain of 81.8% just to break even. To me the saner alternative was never to take the loss in the first place.

Then I stumbled upon an investment strategy that had been used since 1996 and never ever had a negative year. That meant it survived the Russian Default and LTCM Bailout of 1998, the Tech Wreck of 1999, recession of 2000 and the GFC of 2007-2009 and it never missed a beat.

The Birth of FTM

From the time of its inception we knew FTM was something really different. Even our logo is out there, it’s a light bulb with legs signifying a great idea with room to run. Our mission statement is “A new breed of financial thinking”. So, in March 2010 FTM Class A was opened to the public and since that time it has notched up 75 positive months in a row for a total return, net of fees, of 68.91% and an annualized return of 8.78%. All done without any leverage at all while adhering to every single criterion outlined above.

There is something seriously liberating not being tied to the whims of central bankers and policy makers and being able to go to sleep without worrying what the new trading day will bring.

How does FTM work? 

The predominant investment strategy used by FTM was born out of an opportunity to exploit the inefficiencies of the US medical system when it comes to the delays incurred by doctors, hospitals and medical practitioners in the payment for treatment of personal injury cases. Today, more than ever, cash flow is the key to meeting operating costs and, in an effort to speed up the payment process, doctors, hospitals and medical practitioners are willing to accept less now instead of waiting years for payment. It is this that enables FTM to fund the purchase of discounted medical receivables and, by assuming the risk, generate a substantial return.

The majority of the research and direct purchase of the receivables is done via a Medical Accounts Receivables company which is, for want of a better word, a “go between” between an insurance company and a medical patient.
Imagine the following example. There is a car accident, with the result that the injured party (who is not at fault) will require back surgery.

Now, as long as we can prove that they are not at fault, that this is not a pre-existing condition and that the policy limit is sufficient to warrant it, then the receivables company will fund the operation now and collect from the insurance company upon settlement. In the meantime the receivables company places a lien against the insurance proceeds.

The medical procedures covered would have taken place eventually with or without the intervention of the receivables company but, by providing the funding, the operation can happen sooner and the injured party can resume a normal life much faster. The hospitals also provide the surgery at a discount, because they get paid sooner instead of having to wait years for the settlement of the claim.

This is similar, in principle, to accounts receivables factoring, but with a critical difference. In traditional factoring a company buys a large pool of debt and simply hopes that enough will be paid to ensure a profit.

In our case, the Medical Accounts Receivables Company pick and choose the cases they wish to fund and, on average, four out of every five cases reviewed are rejected. Additionally, the receivables company aims for an average purchase price of 33 cents on the dollar as investor safety is paramount. It should also be remembered that the payer is an insurance company, not a patient or hospital.

The FTM portfolio is split between 3 different investments which are FX (forex), which is negligible and so small to be almost non-existent. Then there is the cash component which fluctuates from five to 10% of the entire Class A portfolio and is used to meet redemptions and operating expenses. Then there are the discounted medical accounts receivables that tends to make up anywhere from 90-95% of the overall portfolio.

This means that 90-95% of the portfolio is secured with $3 of receivables for every $1 invested where, if you include the cash component, exposure to market movements is less than 1%.

To be honest, we have become somewhat a victim of our own success in that each passing positive month puts more pressure on us personally to ensure another positive month and, for that reason, we have all but phased out the FX component. In fact, in June of 2012, as a result of the forex trading we came very close to a negative return with 0.08% for that month so, from then on, we scaled back the FX portion dramatically because we didn’t want to be the reason for any of our clients having sleepless nights.

The truth is, you work hard for your money and the only reason to invest is to make it grow over time so you can improve your living standard or have a less stressful retirement. Either way we created FTM to help not to hinder. Personally, I believe a lot of fund managers would do better if they approached investing this way and maybe the hedge fund industry in general wouldn’t be getting as much negative press.

The FTM Difference

You may have heard of the $1,000,000 bet between Warren Buffett (one of the world’s greatest investors) and Ted Seides (a famous Hedge Fund manager) with the proceeds being donated to charity.

The bet is for 10 years with Warren Buffett betting that a low cost index fund (Vanguard 500 Index Fund Admiral Shares) will outperform the collective performance of the group of five hedge funds selected by Seides.

Well here we are a little over eight years into the bet and the index fund is up almost 66% while the hedge funds are up around 22% for the same time.

So, I wondered how FTM Class A would compare over the same time frame as we are up 68.22% in a little over six years. Assuming FTM Class A continued with its annualised return of 8.78%, the return for the 8 years would be 80.23% and that’s with less than 1% exposed to the market.

Then I thought I would compare FTM Class A performance against the major market indices from January 1st 2016 to May 31st 2016 as the markets have had a pretty tough run so far this year. In fact, the reality is that most markets have gone nowhere for the past two years.

The investment landscape has changed. 

15 years ago you would simply ask your client how much they wanted to live off in their retirement. If they said $50,000 a year, then you knew they needed to grow their investments to $1,000,000 and then they could simply put that $1,000,000 in the bank and get $50,000 a year to live off without eating away at the principal.

Now there are five countries with negative interest rates and many more at zero. Exactly how much money do you need to accumulate so that you can earn interest of $50,000 a year in a zero interest world?

According to Bloomberg by February, more than $7 trillion of government bonds worldwide offered yields below zero.

So, if you are interested in finding out more about an investment strategy that is:
• Unaffected by falls in the market
• Non correlated to equites
• Recession Proof
• Consistent

Contact me directly on [email protected] or visit our website for a free investment report.

Company: FTM Limited
Name: Endre Dobozy,
Managing Director FTM Limited Licensed Securities dealer
Email: [email protected]
Web Address:
Phone +678 238 39

Hedge Fund Manager of the Month

Hedge Fund Manager of the Month

Originally established in Switzerland as Blumfeldt & Sons, the company’s history dates back to 1908. Blumfeldt & Sons built a network of investment experts and served the financial interests of clients in Europe. Later, German Lilleväli and Werner Blumfeldt developed a successful partnership, and in 2013 German combined the assets within GL Asset Management.

GL Asset Management values precise human minds. The owner of the firm is a keen chess enthusiast and the team prides itself in attracting some of the top mathematicians and economists. The ethos of GL Asset Management is the understanding that precision counts.

We believe that delivering enhanced returns and capital preservation over the long term requires a rigorous and precise application of incisive intellect, skilled management and significant investment resources. At

GL Asset Management, we offer multiple investment strategies to help our clients meet their investment objectives.
We manage absolute return strategies focused on generating consistent positive returns, regardless of the movements in the underlying market. One of our key investment propositions is Statistical Arbitrage (Stat Arb), a market neural investment strategy that seeks to profit from pricing inefficiencies between two stocks (pairs) identified using mathematical models and algorithms. Similar strategies are successfully used by world’s leading hedge funds to generate stable returns while reducing volatility in the portfolio. Trading exclusively on US exchanges in liquid stocks with market capitalisation of over $3bn, we exploit price imbalances by using proprietary mathematical models and rigorous risk management processes. On average, the strategy seeks to generate 12% annual returns with 2% volatility, thus enabling stable appreciation of investment, while minimizing market risk.

For clients seeking absolute returns via exposure to Long/Short equity strategies, we have a team of experienced portfolio managers that apply a systemic investment approach to managing Global and European investment strategies. We also offer tailored solutions to clients preferring directional investment strategies that seek to generate long-term capital growth by taking long market positions. We help these clients gain exposure to individual sectors and markets where alpha can be generated, across Global and European markets.

Our investment philosophy is deeply rooted in contrarian thinking. We believe that superior returns come from a consistent challenge of conventional thinking at every point. Valuations reflect consensus views – taking advantage of valuation inefficiencies requires taking a contrarian view to understand what other investors are misinterpreting, and thereby what they are mispricing.

Our experience in asset management dates back to the turn of the 19th century. Our outlook is unashamedly modern, embracing, combining and capitalising on the latest breakthroughs in mathematics, engineering and IT. We develop ideas and analysis that drive new perspectives, new products and new paths to growth.

Name: GL Asset Management
Email: [email protected]
Web Address:
Address: Stockerstrasse 57, 8002 Zürich, Switzerland
Telephone: 41 (0) 44 222 11 50

Hedge Fund Manager of the Month

Hedge Fund Manager of the Month

The crucial factors that differentiate us from our peers are experience, performance and methods. In terms of experience, Finlabo was one of the first firms in Europe to launch a long/short equity strategy in a UCIT format in 2006 and therefore the track-record of our fund is longer than most of our competitors. Moreover, our investment team, composed of myself, Anselmo Pallotta and Maurizio Scataglini, has more than 50 years of cumulative experience on investments management.

From a performance point of view, our results have been outstanding. Our flagship fund, the Finlabo Dynamic Equity, has systematically outperformed equity markets and hedge fund indexes with an approximate return of 7% per year and moderate volatility levels of about 8%. The fund invests in a selected portfolio of European equities while hedging dynamically market risks by selling short benchmark index futures.

Our investment strategy relies on the quantitative models and software we have developed in-house through advance research competences. Our stock-picking model evaluates about 2.000 stocks daily based on fundamental and technical variables such as valuation multiples, earning momentum, price momentum, etc. At the same time, our trend following model assists the dynamic hedge decisions within a strong risk-management framework.  

In the last years, high volatility in equity markets and unstable macroeconomic conditions have represented an important challenge for our industry.  However, our non-discretional quantitative approach has proofed to be able to generate interesting returns in despite of market conditions. In this sense, we have been responsive to market circumstances and we have kept our alpha generation targets.  

Having this in mind, we keep an optimistic vision of our business future. An increasing part of our current assets under management now corresponds to international investors and consequently, we are planning to continue to expand our international presence through distribution partners in the most important European financial centres. Our recognition in the industry has increased significantly thanks to our performance, so we want to continue to walk through this path by keeping our alpha-generation commitment.

Company: Finlabo Sicav
Contact Name: Paolo Lo Grillo (Finlabo SICAV), Alessandro Guzzini (Finlabo SIM)
Email: [email protected]
Web Address:,
Address Finlabo Sicav: 42, Rue de la Vallée, L-2661 Luxembourg R.C.S. Luxembourg: B 110 332
Telephone: +352 27 726 100
Addess Finlabo SIM: Corso Persiani, 45. 62019. Recanati. (MC). Italy.
Telephone: +39 071 7575053

FundAdministration - Challenges Facing Hedge Fund Start-ups

FundAdministration – Challenges Facing Hedge Fund Start-ups

Typically we work with hedge fund managers that require more personalised attention from their administrator. We act more as a partner than a provider, offering them accounting, administration and consulting for their businesses.

In terms of the people we serve, we have a variety of clients in the financial services industry and customise our suite of products to meet the individual needs of each client.

With Hedge Fund Start-ups arguably the most common mistake is launching without enough capital, having not even prepared a breakeven analysis or creating a business plan. Understanding the costs involved is a very important factor to consider in a start-up, for example complex structures cannot be implemented if you have a limited budget.
Trying to launch a business within a few weeks is totally unrealistic.

Believing you can duplicate the strategy you might have ran at a larger firm should be avoided and keep in mind that your track record may not be portable. Never leave a large organisation thinking clients will follow.

Among others, you must be clear on who your target investor is and understand the tax consequences to the investor.
To make the investment flourish you need to avoid these mistakes, due diligence and choosing the right service partners are key factors which can help you do that. However you will reach a stage where youhave to be willing to take some level of risk to help you realise the returns.

At present I am seeing growth in the industry, however at the same time it is being stunted by banks not wanting to do business with hedge funds. As a result, we are constantly finding new ways to assist our clients to overcome these challenges.

Just like any firm the staff play a key role behind the success of the firm, in fact without the team at Fundadministration our clients would be lost.

Looking ahead to the remainder of 2016 and beyond we are looking at some strategic partnerships that will hopefully accelerate our growth as well as assist our clients in expanding their funds. The key challenges will without doubt be banking, cyber security, increased regulations and reporting.

Founded in 1990, we are a leading global hedge fund administrator with offices located in New York and clients around the world.

Our highly professional and experienced associates provide our clients with world-class service, transparency and oversight along with independent data verification. Our cutting-edge technology is fully automated, flexible and provides a cost-effective level of reliability that meets the specific needs of our client’s sophisticated investors.

Company: Fundadministration, Inc.
Name: Denise DePaola, CPA, CEO
Email: [email protected]
Web Address:
Address: 4175 Veterans Memorial Hwy, Suite 204,
Ronkonkoma, NY USA, 11779
Telephone: 631-737-4500

Business Elite MD of the Year 2016

Business Elite MD of the Year 2016

As the UK’s largest friendly society, LV= have more than five million members and customers and exist to grow the value of their business for the benefit of their members. When asked about why their company has grown from strength to strength, Rowney simply says: “We do this by putting our customers at the centre of everything we do and by living our mutual and ethical values. We offer our products and services direct to customers, as well as through advisers and brokers, and through strategic partnerships.”

Formerly known as Liverpool Victoria, the company rebranded as LV= in 2007. Since then, the LV= brand is now recognised for being modern and vibrant and well placed for an even more successful future. A testament to their success is that they have over 5.7 million customers, of which 1.1 million are members. Furthermore, within life and pensions, they are the top provider of individual income protection in the advised market and a leading provider of enhanced annuities.

Although the company is very forward-thinking, to say that the company has been around for quite a while is an understatement. LV= was founded in Liverpool in March 1843, with the aim to help people on low incomes maintain a standard of living for their families and save for their funerals so they didn’t burden their families with this expense after they had passed away.

173 years on, the LV= Group employs over 6000 people. The Life and Pensions area that Rowney controls has over 1,000 employees based across main centres in Bournemouth, Exeter and Hitchin plus a network of regional offices.

As you can imagine, managing such an enormous team can be quite a daunting task. However, Rowney believes that the degree of specialisation is what allows them to perform so well. “We help our customers protect their health, wealth, family and wellbeing,” says Rowney. “To do this we specialise in a number of areas. Firstly, our Retirement Solutions business covers our retirement and investment businesses, from pensions and annuities to equity release and bonds.

Secondly, our Protection business includes a range of award winning products and services including a market leading position in income protection. Lastly, our Protection and Retirement Financial Advice Services include our automated online advice offering via our Retirement Wizard. All of these services combine to create the success behind our Life and Pensions team.”

Prior to LV=, Rowney accumulated a wealth of experience and expertise that has added to his current role. “In the early 1990s, I joined Barclays, which gave me my first insight into the financial services industry,” explains Rowney. “During this time I held a number of different positions, including business risk director, chief operating officer of premier banking and integration director for Woolwich and Barclay’s retail bank.”

It was in 2007 when Rowney joined what was then known as Liverpool Victoria, where he was instrumental in their rebranding as LV=.

“I started as a group chief operating officer in February and was appointed to the board in August 2007,” says Rowney. “As group COO, I was responsible for the transformation programme that saw LV= successfully re-brand and develop functions to support the trading businesses that have delivered significant growth over recent years. In 2010, I was appointed managing director of LV= Life and Pensions – leading a strategy to become the UK’s leading retirement and protection specialist.”

LV= ‘s position as leaders in their industry is something Rowney takes great pride in, and as such he is constantly ensuring that the company is always embracing any new technology or trends that come along the way.

“Our continual challenge is to utilise digital technology,” says Rowney. “We’ve made great strides into embracing digital, but technology progresses quickly, so it’s important for us to continue to move at pace to be at the digital forefront – replacing our legacy systems enabling us to become more efficient and easy to do business with.” Alongside the continuing developments in technology, there are also challenges facing Rowney in the retirement industry too.

“At the moment, we are nearing the end of a period of transition in the retirement industry,” says Rowney. “Driven by the pension freedoms changes in 2015 and now the FAMR review impacting people heading into retirement. With retirement being viewed as a series of smaller stages, which require multiple decisions, it’s important for customers to understand the decisions they are making. We’ve been proactively looking at ways to help people reaching retirement, making advice affordable to everyone through utilising automated online advice, but there is more to be done to get people thinking about their retirement sooner.”

“Looking towards the long term, these challenges include how we engage with our current generation to talk about saving for retirement, and we really need to challenge the ‘buy for today over saving for tomorrow’ culture. Auto-enrolment has attempted to improve one part of this but I still believe we need to do more as an industry to engage people to think about their retirement, at both ends of peoples working lives, to save enough for retirement and to make the right decision at retirement.”

“Furthermore, there appears to be no let-up in the pace of regulatory change, with the launch of the secondary annuity market and forecast tax changes are areas that will keep the life industry busy over the coming years.”

Despite these challenges, Rowney remains optimistic that they are more than capable of meeting the demands of their industry. A motivating factor for him is receiving recognition from Wealth & Finance magazine, which he believes is further evidence of their success.

“I was very surprised to be receiving this award,” says Rowney. “Nonetheless, our Life and Pensions business has gone from strength to strength in recent years, so this is testament to our hard work paying off to be officially recognised.”

Name: Richard Rowney

Company: LV=


Hedge Fund Manager of the Month - USA

Hedge Fund Manager of the Month – USA

What is the Tradex Relative Value Fund?

The Tradex Relative Value Fund is a structured-rates hedge fund strategy. The Fund uses a market-neutral, multi-strategy approach to achieve superior risk-adjusted returns. Please describe the market-neutral nature of strategy.

We attempt to hedge out risk factors that we do not want to take and focus on those we seek. Thus, in accordance with our expertise, we strive to hedge interest rate risk while collecting carry and capturing price performance from securitized Agency bonds.

Please describe your multi-strategy approach.

We believe that our multi-strategy fixed-income approach is well equipped to provide superior risk-adjusted returns over a full range of market environments by implementing a duration-neutral combination of prepayment arbitrage, relative value trading and opportunistic investing.

In Prepayment Arbitrage, we attempt to identify opportunities where collateralized Agency bonds are cheap relative to their intrinsic value. We accomplish this by developing a more accurate view on prepayments and the resultant cash flows than what is priced by the market. Given the varying degrees of sophistication across fixed-income investors with differing objectives and constraints, those with superior models and market experience are often presented with lasting opportunities to capture returns.

Relative Value Trading in Agency pass-through securities is a source of alpha in very liquid fixed-income securities. These assets, which are second in liquidity only to US Treasuries, can be arbitraged via econometric mean-reversion strategies to produce high-conviction, short-term trades that last from days to weeks.

Opportunistic Investments may be the result of broad dislocations as seen during the Great Recession and the Great Recovery. Many fund structures limit investment strategies and leave money on the table when outsized opportunities occur. Given this reality, we designed the strategy to take advantage of such dislocations. Due to the uncertainty seen in markets today, this sleeve should augment return for our investors.

Please provide us with some background on the Portfolio Manager.

In 2014, Jeff Kong founded Tradex Global Advisory Services, for which he directs all investment activity. Prior to Tradex, Jeff was a Portfolio Manager at San Francisco-based Passport Capital. Jeff started his hedge fund career at Structured Portfolio Management, where, from 2000 to 2010, he managed the $1B flagship SPM fund, Structured Servicing Holdings (SSH) that annualized 23.56% net during his tenure as Portfolio Manager. Bloomberg Markets ranked SSH the #1 Large Hedge Fund in the world and SSH placed #8 in Barron’s Top 100 Hedge Fund List. Jeff is a member of the Association of Asian American Investment Managers.

Whatever the current market conditions are, why do prospective clients need to be confident that their manager is able to best serve their unique needs, provide goal-oriented investment management solutions and deliver strategies in order to preserve and prudently grow their wealth through all economic and market cycles?

Our experienced team works closely with each client. We tailor our investment management practices to the specific risk tolerance and investment objectives of both our institutional and individual investors.

We also accommodate our clients by establishing investment vehicles that fit their unique requirements in terms of SMAs. Investor relations is a central part of our business, and our team has decades of experience meeting the special needs of our clients who represent a variety of investor profiles.

How can your company assist in achieving meaningful investment results through the disciplined application of time-tested methods of analysis?

Our Portfolio Manager, Jeff Kong, has weathered many business cycles over his 25-year career in structured-rates that began at Greenwich Capital in the 1980’s. Jeff is regarded as a pioneer of the prepayment arbitrage strategy. Over his career, he developed and refined the multi-strategy approach to fixed-income investing that is utilized in the Tradex Relative Value Fund. This evergreen investment approach is unique in that it is interest rate neutral and it has the potential to profit from rate uncertainty. Jeff’s investment management skill has been tried and proven in the most extreme market conditions, and he has consistently delivered stable returns to investors.

What do you believe contributes towards successful investment outcomes?

A disciplined approach to risk management is the key to successful investing. Our investment team has built a robust and rigorous system to maintain our intended exposures precisely, at both the portfolio and asset levels. As part of our market-neutral approach, we attempt to hedge out the risks we wish to avoid while managing those risks that we seek. We strictly limit our exposure to our areas of expertise, taking prudent positions based on structured rate fundamentals and spread risk. We believe this focus is an important driver of long-term performance.

Company: The Tradex Group
Name: Jeff Kong
Email: [email protected],
[email protected]
Web Address:
Blog Address:
Address: 35 Mason St, Greenwich, CT 06830
Telephone: (203) 863-1500

Equity Markets May Still Price-In “Britin” or Shake-Off “Brexit”

Equity Markets May Still Price-In “Britin” or Shake-Off “Brexit”

Uncertainty surrounding the UK’s decision whether or not to leave the EU is starting to test traders’ nerves. Implied volatility of the GBP/USD spiking to 29% – a level comparable to the extreme highs seen in the 2008 financial crisis – and 10 year gilts yielding less than 1.1% to reach new historic lows (see Chart 1) means risk-off positioning is now starting to build up.

Equity markets in Europe had resisted succumbing to significant downward pressure in the weeks leading up to the referendum. But if last year’s “Grexit” event is any guide, risk sentiment in Europe remains fragile.

As shown in Chart 2, in the final weeks leading up to last year’s “Grexit” referendum on 3 July 2015, the FTSE 100 and EURO STOXX sold off sharply, falling by about 6% over a 30 workday period prior to that referendum. Another 2% was shed off European equity markets following the rejection of Troika’s bailout package.

Comparing the same period to this year’s potential “Brexit” outcome on 23 June, equity markets in Europe remained positive up until last week, since when sentiment has soured sharply (see chart 2). Against last year’s heightened volatility instigated by slumping crude oil and China’s slowdown fears that dealt a blow to equities in Europe and elsewhere, markets must judge the reverberations of a Brexit scenario to European shares as either hugely overblown or, that such a scenario is simply not being priced-in enough. Investors may be looking for bookmakers’ odds for guidance more so than opinion polls, not least given the extent to which most pollsters have failed to accurately read the Conservatives’ strong showing in last year’s UK general election. While the opinion polls show that both the “Remain” and “Leave” camps remain essentially tied, with shifts between them moving within the margin of error, bookmakers odds have shown for some time now a persistent and decisive majority of punters betting Britain to vote “Remain”. For instance, while the YouGov / Times has UK’s EU referendum at 43% “Remain”, 42% “Leave”, and 11% “Don’t Know”, betting firms see 59% “Remain” and 41% “Leave”[1], with the best odds for those betting on “Remain” at a 34% return on their stake while the best odds for “Leave” making a 250% return[2].

Certain Uncertainty not Reflected in European Equities

While the looming threat of Greece’s default and systemic risk inherent in Europe’s banking system in an event of Greece exiting the Euro cannot be directly comparable to the risks of “Brexit”, the political and economic uncertainty is likely to be still substantial enough for investors to consider hedging their positions in European assets. The risks short to mid-term to financial markets in a nutshell are the following:

1. Britain’s Brexit camp has yet to articulate what kind of trade model is wants to adopt and, judging purely by the Brexit camp rhetoric border control and eliminating EU contributions, it is unlikely to be one of Europe’s non-EU members: Switzerland and Norway each pay into the EU budget and allow for free movement of EU citizens in exchange for free trade and capital flows. History suggests it will take several years to renegotiate trade deals and any deals struck will be on terms set by the EU, not the UK. Until then, investors will simply not know what the terms of trade and capital flows will be.

2. If not out of economic sense it will be for the sake of self-preservation that EU officials will impose some kind of penalty to the UK for leaving, through a custom’s charge, tariff and other barriers (such as raising product standards through labelling / packaging requirements, etc.) to preclude other EU members from following UK’s lead and prevent the disintegration of the EU. Given Britain’s overly open economy, it will effectively result in a meaningful tax for UK companies exporting to the EU.

3. The political uncertainty of Britain is also relatively large. With David Cameron’s leadership already challenged by about half its Conservative PMs, a new PM embracing a more rightist agenda may also mean major reshuffling of cabinet members, including David Cameron’s Finance Minister (Chancellor of the Exchequer) George Osborne. As a result, tax and spending policies may change and consequently the budget deficit targets.

4. Scotland and Ireland are also vocal supporters of the EU and a Brexit scenario would likely provoke another Scottish referendum for independence. Building up a UK border could also put the vulnerable peace process with Northern Ireland at risk and see tensions flare up with Ireland anew. At risk is the fracturing of Britain’s political union.

Last week’s souring sentiment in European equities may be a prelude to more risk-off positioning such as was seen in Grexit last year. Investors should be prepared for the potential eventuality that uncertainty building up in the pound may spread to rising volatility in European equities. Hedging long European equity exposures and long dollar strategies may regain appeal.

Investors sharing this sentiment may consider the following ETPs:

• Boost FTSE 100 1x Short Daily ETP (SUK1)
• Boost FTSE 100 2x Short Daily ETP (2UKS)
• Boost FTSE 100 3x Short Daily ETP (3UKS)
• Boost FTSE 250 1x Short Daily ETP (1MCS)
• Boost EURO STOXX 50 3x Short Daily ETP (3EUS)
• Boost EURO STOXX Banks 3x Short Daily ETP (3BAS)
• Boost ShortDAX 3x Daily ETP (3DES)
• Boost FTSE MIB 3x Short Daily ETP (3ITS)
• Boost Gilts 10Y 3x Leverage Daily ETP (3GIL)
• Boost Long USD Short EUR 4x Daily ETP (4USE)
• Boost Long USD Short EUR 5x Daily ETP (5USE)

For investment professionals only. This communication has been provided by WisdomTree Europe Ltd which is an appointed representative of Mirabella Advisers LLP which is authorised and regulated by the Financial Conduct Authority. 

Meatcure Seek Backers for Their “Impossibly good” Crowdfunding Campaign on Seedrs

Meatcure Seek Backers for Their “Impossibly good” Crowdfunding Campaign on Seedrs

Meatcure’s homeland in the East Midlands was one of the UK’s highest restaurant growth areas in 2015, at times outpacing London. When launching their very first restaurant in Market Harborough, a provincial market town of just 22,000 population, they hit £14,000 sales in the first week, proving to them that Meatcure had the potential to be something special.

From beginning life in Market Harborough, Leicestershire, in late 2014, in just 12 months they’d opened restaurants two and three in Leicester and Leamington Spa. Their fourth opening in Bedford is just weeks away from launching and has been 100% self funded from the success of the first three restaurants. The quick growth, mixed with a strong cult customer following has seen the demand for Meatcure to grow into further surrounding impressively profitable market towns.

Meatcure started out with a simple goal; to put the best patty in the best brioche and to create an impossibly good burger. “We build restaurants we like to hang out in, food we like to eat and surround ourselves with individual and inspiring people. Our staff have become our family and their family our customers”, that’s their motto.

Meatcure will use the funds raised to secure five new restaurant sites in market towns across the midlands and beyond. With the UK having over 500 market towns and smaller cities, Meatcure will be bringing their passion and ingenuity to a much wider audience, without compromising an ounce of quality or personal touch.

Their commitment to impossibly good saw them using their own recipes working with local suppliers and the best ingredients to create the perfect patty brioche marriage. Even with a combined 230 years experience it still took nearly twelve months to perfect the recipe. Their philosophy of doing it properly with no added rubbish sees them unrivalled in the booming burger market.

Meatcure Co Founder, Paul Rigby, commented: “There’s huge potential benefit to investing in Meatcure’s campaign. The way we build our restaurants is fast, fun and with a view to getting a good payback for our investors. It’s not rocket science, it’s mostly wood and lots of those trendy light bulbs. Our aim is to create a backdrop for our impossibly good burgers, craft beers and killer cocktails. The good news with the crowdfunding campaign is that you don’t have to wear a tool belt or steelies, we’ll do that bit for you!”

Co Founder, Rob Martyniak, added: “At Meatcure we are kind of old school about things. We make impossibly good burgers, we do steak properly, superb salads and proper food for kids. We love coffee, craft beers and killer cocktails however there are no £10 cocktails or long table waits. You’ll be greeted with an old school smile and you might even get to choose the vinyl that’s playing. I think that’s why we’ve seen the Meatcure name grow. We do what we love and we love what we do. We can’t wait for others to be a part of it.”

“Our fourth restaurant opening this month is 100% self-funded and our business model means that this campaign is expected to be our only round of crowdfunding, making now only and best time to get involved.”

Investments will be made through Seedrs, the UK’s most active investor in private companies. Ekaterina Steube, Campaigns Success Manager at Seedrs said: “We are excited to welcome Meatcure on to Seedrs. The brand is all about great food, world-class customer experience and supporting local suppliers, and their campaign reflects that. The team is exceptionally focused with highly experienced founders and we look forward to seeing the business scale.”

Meatcure are crowdfunding with Seedrs launching today and you can find out more on how to be a part of it by visiting

Zyfin Launches World's First Turkish Sovereign Laddered Bond ETF

Zyfin Launches World’s First Turkish Sovereign Laddered Bond ETF

Rising interest among domestic and international investors in the Turkish domestic debt markets has led to enhanced liquidity and strength in Turkish sovereign bonds. It is the sixth largest local currency bond market among emerging economies. The Fund offers international investors low cost and easy access to Turkish sovereign bonds.

The objective of the Fund is to track the performance of the ZyFin Turkey Sovereign Bond Laddered Index (‘the Index’) which consists of a basket of sovereign bonds issued by the Government of Turkey in Turkish Lira (TRY) across various maturities (‘the Index Securities’). Underlying exposure is taken through physical replication and is therefore more efficient in tracking the index.

The Index is comprised of six bonds issued by the Government of Turkey, selected from a universe of all bonds issued by the Government, which have greater than 100m TRY outstanding amount. The bonds are divided into three baskets, with each basket containing two bonds and having a residual maturity closest to a target maturity of 2, 5 and 10 years respectively. Index Securities are issued with fixed- rates and the Index is calculated in USD.

ABank, Turkey, (subsidiary of Commercial Bank of Qatar) will provide local market expertise in the Turkish market with geopolitical and macroeconomic assessments, interest rate trends’ research and local market intelligence. These are all critical elements in Turkish sovereign bond market analysis. The synergies generated by on the ground expertise of ABank and asset management strengths of ZyFin is expected to add significant value to the product.

Nina Shapiro (Board Member, ZyFin and former VP Finance and Treasurer, International Finance Corporation) said:
“With all the global financial volatility over the past few years, the economic growth of Turkey has been all the more impressive. ZyFin is bringing to international investors an interesting opportunity to add Turkish, as well as other emerging market, exposure to their portfolios in an efficient and transparent way.”

Sanjay Sachdev, Executive Chairman of ZyFin, said:  “Straddling the continents of Europe and Asia, Turkey’s strategically important location has historically being very important. Turkey remains an investment grade destination and has enjoyed sustained GDP growth over the past 16 years with forecasts indicating continued growth of 3.5% in 2016. With research insights from ABank and backed by our expertise in asset management we have structured this attractive investment solution for investors who wish to participate in the growth momentum that we believe will unfold in Turkey.”

Müge Öner, ABank Acting CEO, added: “I strongly believe that the newly established Alternatif ZyFin Turkey Sovereign Bond ETF will be an important instrument for international investors who would like to focus on the Turkish market. As ABank, we are glad to be the preferred counterparty and broker of this ETF in Turkey. With such partnerships, we will continue taking strong steps to be a key player both in Turkish banking sector and in the region, thanks to the support of our major shareholder The Commercial Bank (Q.S.C.).”

Abdurrahman Bilgiç, Ambassador of Turkey to the United Kingdom, commented:  “Thanks to the steady economic growth in Turkey, there have been important steps to bring Istanbul and London even closer in terms of economic and financial relations. In this manner, I welcome the listing of the world’s first Turkish Sovereign Bond ETF today on the London Stock Exchange, which will enable investors to invest directly into the Turkish fixed income market.”


WisdomTree Launches two Quality Dividend Growth UCITS ETFs on the London Stock Exchange

WisdomTree Launches two Quality Dividend Growth UCITS ETFs on the London Stock Exchange

WisdomTree’s Quality Dividend Growth methodology puts an emphasis on the shifting trends in dividends and focuses on fundamental metrics that the company believes are associated with future dividend growth potential. These strategies use quality metrics focused on companies who are growing their dividends using the following criteria:

Growth: Long-Term Earnings Growth Expectations
Firms expected to grow their earnings faster, based on consensus analyst estimates, should have greater potential to increase future dividends.

The constituents selected by WisdomTree’s Quality Dividend Growth Indices exhibit consistently higher median dividend growth compared to market capitalisation-weighted benchmarks excluding Emerging Markets.

Quality: Combining Quality Factors to Target Earnings Inputs

Three-year average return of equity (ROE) and return on assets (ROA) figures are used to determine how efficiently firms are generating profits.Whilst ROE offers a means of gauging profitability, it can be inflated by leverage. ROA offers a means of mitigating overleverage, and combined with ROE, offers a way of screening for sustainable earnings.

Viktor Nossek, Director of Research at WisdomTree Europe said:

“Investors are keen to explore more developed methodologies to gain access to dividend-related strategies and at WisdomTree, we believe in the power of dividends to deliver the potential for enhanced risk-adjusted returns. In building these new proprietary strategies, we employ the same ’Buffett factors’ of return on equity (ROE) and return on assets (ROA) as a driving force for stock selection in our Quality Dividend Growth strategies, tilting towards quality companies with low debt and high return on equity.

Nizam Hamid, ETF Strategist at WisdomTree Europe added:

“The addition of these new ETFs – based on an evolving but proven investment strategy focused on quality dividends – means that we now offer UCITS ETFs that cover the full spectrum of dividend and income related investment themes. The WisdomTree Global Quality Dividend Growth UCITS ETF (GGRA) also represents our first global equity product to be launched on our UCITS platform. By creating innovative and transparent strategies we aim to bring to clients a breadth of dividend-oriented investment solutions that are critical in today’s low interest rate environment.”

The WisdomTree’s Quality Dividend Growth methodology places an emphasis on future dividend potential. Kenneth French and Eugene Fama’s, “A Five-Factor Asset Pricing Model”* academic paper showed that the highest quality basket of stocks in the US market outperformed by 1.5% per annum from 1963 to 2016, leading to double the market’s return. Research by MSCI for the Norwegian Ministry of Finance** also highlighted the benefits of focusing on income and dividends with 78.6% of equity returns over the past 10 years coming from a combination of dividend growth and dividend yield, rising to 93% over 20 years. Warren Buffet has also espoused quality traits in his long run approach to investing.

Ones to Watch in Hedge Funds 2016

Ones to Watch in Hedge Funds 2016

At Venus Capital, their firm focuses on well collateralized direct lending to small and medium enterprises (SMEs) in India with low loan to values and other safeguards to help protect the return of capital. Among their diverse range of clients include corporate pension funds, family offices and sovereign funds in US and Europe. Throughout their time, the company has advised private funds invested in a variety of asset classes focused on India including its current offering of a direct lending fund. Today, Venus Capital remains at the forefront of sourcing, developing and executing different approaches for investors.

“The firm runs the Venus India Structured Finance Fund, which has invested through a tax efficient structure through Mauritius, into an operating company in India that makes loans to SMEs,” says Mehrotra. “We manage investment risks by making all decisions through a four member investment committee, which has to approve loans on a unanimous basis.”

When asked about how their company has risen from the ranks to become leaders in their industry, Mehrotra believes that this is primarily due to the long-standing relationships they have built. “Since our inception over 20 years ago, we have developed a relationship-based ecosystem that includes brokers, analysts, fund managers and independent investors – all of whom are invaluable in assisting us in identifying, sourcing, and analysing investment opportunities,” says Mehrotra. “A combination of unique insight and application of sound ideas helps Venus Capital in capitalizing upon the dynamic growth in India and related emerging markets.”

It is this desire to build and maintain relationships that is at the heart of everything Venus Capital do, and has been a key contributor to their investment strategy. As Mehrotra outlines: “Our biggest asset is our deep network of on-the-ground contacts who constantly work with us in assessing and evaluating both risk and opportunities. Local execution is the key. Though we have a global presence, it is the local intelligence to judge the creditworthiness and intention of a borrower that matters the most. We have developed a network of relationships that gets us the qualitative information on a borrower to make the right decision.”

As for their team, Venus Capital has a very selective process when it comes to choosing their staff. The CEO of Venus India Asset Finance,who they hired in July 2015, comes from the largest private bank in India and handled a credit portfolio of $2B during that time. The company’s board selects key people like the analysts, compliance and legal, while many operational hires are left to the CEO to decide. Similarly, a high level of research and analysis is undertaken when deciding whether to work with a client. “For us, lending is always about the behaviour of the client, especially during trying circumstances and the intentions at the time of borrowing. Moreover, no balance sheet can provide the whole story about a particular client. Hence, we have developed the network of people in the financial and banking community, who are able to obtain the necessary information to verify the credibility of the borrower.”

In terms of the ethos of Venus Capital, corporate social responsibility is of paramount importance to the company, where they are heavily involved with a number of organisations dedicated to developing communities and improving the lives of vulnerable people. “We firmly believe in giving back to the community in which we live and work, and take great pride in helping a highly diverse range of charitable organizations,” says Mehrotra. “For example, we support IIMPACT, which provides educational opportunities to girls aged 6 to 14 years from socially and economically disadvantaged communities in India who traditionally have had no access to schooling. Their aim is to break the cycle of illiteracy that girls from such communities are mired in. This is done through local community based learning centers where they are provided meaningful and stimulating education to guide their entry into formal schooling. These are just one of the many organisations that Venus Capital takes tremendous pride in sponsoring.”

As a company immersed in the Indian market, there are number of challenges and opportunities that are specific to their region. “From our experience, it is always important to keep the costs low for a borrower,” says Mehrotra. “With the Indian government’s risk-free rate for a ten-year treasury currently running at around 8%, a small and medium enterprise borrower ends up borrowing at 16.5% approximately. As a result, it is important to have low cost funds and still make a good spread over it. “As mentioned earlier, our collaborative approach helps keep Venus up to date with the latest local information,” added Mehrotra.

“Our management and analysts stay ahead of emerging trends in the industry by operating customised technology to monitor interest and principal payments. Furthermore, we subscribe to industry and economic databases and services, such as Bloomberg, for collecting quantitative data. The most important thing is to collect qualitative data to know the intention of the borrower, in order to stay ahead of the market. The key is to create innovative customized solutions in an efficient, fast and nimble manner.”

In looking closer at their investment strategy, Mehrotra believes that there are a number of aspects which help them differentiate themselves from their peers, particularly in the level of care and consideration that goes into their strategy. “We feel our approach to investing in India through direct lending is a prudent one, particularly when you consider that our typical loan has a loan to value ratio of 33-40%. If an investor has the potential to achieve returns approximating those of a private equity investment with risks more reflective of a senior secured lender, why would the investor accept the increased risk of private equity investment?”

In spite of their success, Venus has had to overcome a number of obstacles to reach the heights that they have achieved today. When asked about their biggest challenge at present, Mehrotra believes that this is the appreciation of the USD against emerging market currencies. “Although the Indian Rupee has fared better against GBP and the Euro, it has declined slightly against the USD in last 12 months,” Mehrotra explains. “The Indian Rupee has done relatively well compared with other emerging market currencies. In the short term, it is a function of money flows into India but commodity deflation is helping Indian currency as import bill has gone down. Venus occasionally hedges against the decline in Indian Rupee, if macro fundamentals are looking bad and its models predict a slowdown of investment flows into the country.

“However despite these challenges there are a number of opportunities inherent in working in this market,” added Mehrotra. “The opportunity to be a shadow lender in India emerges from the fact that there is a tremendous need for growth capital and commercial banks are restricted in many ways to fulfil that need. Banks are not nimble and flexible enough to understand the needs of the small and medium enterprise borrower. After the credit crises of 2008, they have mostly focused on the larger borrowers, leaving opportunities to work with smaller borrowers. This asset class offers a better risk adjusted return in India. Eventually, the plan is to take the operating company public in India, giving equity investors an exit, assuming favourable operating results, market conditions, and other contingencies, of course.”

Looking further ahead into 2016 and beyond, Mehrotra believes that their company will continue to ride the waves of success. “There are a number of areas into which Venus can grow, and will provide us with a fresh set of opportunities. We are currently evaluating on whether we should enter the housing finance and purchase of non-performing assets business in India. Furthermore, banks are being told by central banker to clean up their balance sheets and both of these areas have good opportunities which will keep Venus busy for the foreseeable future.” 

Company: Venus Capital Management, Inc.
Name: Vik Mehrotra
Email: [email protected]
Web Address:
Address: 99 Summer Street, Suite M100, Boston, MA 02110
Telephone: +1-617-423-1901

Ones to Watch in Hedge Funds 2016

Ones to Watch in Hedge Funds 2016

We handle redomiciliations of investment schemes from offshore domiciles to Malta, passporting of UCITS funds to various EU markets, as well as cross border mergers for UCITS funds merging into Malta based funds.

Malta’s fund industry was largely created on the strength of the hedge funds already established locally; with this alternative domicile being recognised to host an ideal regulatory infrastructure that can cater for the requirements of the sector.

Being the local market leader in fund administration, in terms of market share has been key in providing its services to this market segment. VFS’ commitment has in fact been by way of its ongoing business promotion initiatives in the company’s core markets, targeting the hedge fund and alternative space.

Our commitment is further evidenced by the diverse hedge fund strategies serviced by the company, the provision of additional services required as well as assisting fund promoters choose the best suited hedge fund framework.

In effect, Malta’s regulatory framework for hedge funds is not a onesize- fits-all model, but is multi-layered catering for the diverse risk profiles of investors, as well as addressing the needs arising from the investment managers’ diverse strategies.

Apart from the provision of mainstream fund adminitration services, VFS as Malta’s largest fund administrator strives to be ahead of the curve in terms of the dynamic nature of the market, growing sophistication of investors, evolving regulatory frameworks, challenges faced by fund managers and their ensuing demand.

The company’s one-stop solution approach for structuring funds, redomiciliations, cross-border mergers and passporting, alongside the full suite of traditional fund administration services ensures the ease of setting up and running a fund in Malta.

VFS’ commitment to further support new start-ups and the existing client base is also manifested through the provision of ancillary services, including regulatory reporting for AIFMD, CRS and FATCA, support to fund managers by way of fact sheets, monthly management accounts and on-going regulatory reporting, as well as support from the parent company, Bank of Valletta, in terms of custodyship, brokerage and banking services including opening of bank accounts, as well as hedging arrangements.

Adopting such a holistic approach ensures that our client base is assured of all forms of administrative and related support, thereby facilitating fund managers to focus their attention on their own internal core competences.

The company’s mantra is to deliver a comprehensive suite of services to asset managers in a professional, timely and accurate manner that addresses their diverse and growing demands. The philosophy permeating the psyche of the company is based on building long-lasting relationships with clients, underpinned by reciprocal trust, commitment and engagement.

VFS has over the years been awarded by multiple specialist magazines as the Best Administrator in Malta, no doubt an endorsement by our client base who contributed to this. It must also be stated that business generated through word-of-mouth recommendations by existing clients is another major contributor to the company’s business growth. VFS recognises its employee’s as the company’s main asset.

VFS therefore invests heavily and continually in its staff development, with a view to improve their skill-sets, knowledge and competencies, considered fundamental to offer a qualitative service that meets clients’ expectionations. 

Name: Joseph Camilleri
Email: [email protected]
Web Address:
Address: TG Complex, Suite 2, Level 3, Triq il-Birrerija, l-Imriehel Birkirkara
BKR 3000 – Malta.
Telephone: (356) 2275 5599

Ones to watch in Hedge Funds 2016

Ones to watch in Hedge Funds 2016

Our company’s niche area is in alternative investments, and at the moment we manage two investment funds. The first is the Physical Diamond Fund, which broadly invests in rough diamonds and natural polished diamonds. The diamonds are directly sourced from producers and they are certified by a Gemmological Institute. The fund targets a return of 5% to 6% p.a. with a target volatility of 2%-3% p.a. Furthermore, in 2015, the fund was selected as “Swiss Fund of the Year” by “Global Awards”.

Our second fund is called the Triple Opportunity Fixed Income Fund, which invests globally in government bonds, corporate bonds, convertible bonds and short term securities and securitised derivatives. The fund may use up to 200% Leverage, and the target return of the fund is 6% to 8% p.a., with a target volatility of 10% p.a. In 2013, the fund was elected as “Best Fixed Income Fund Europe” by “World Finance Hedge Funds Awards” and in 2014 the fund was elected as “Best Fixed Income Fund Switzerland” by “IFM Awards”.

When it comes to our process, risk management is essential. Finanz Konzept AG has a risk management framework that is designed to identify, monitor and mitigate the portfolio risk. Alongside this implementation, Finanz Konzept AG combines external research and inhouse proprietary research in order to adapt to changes in the market environment and future opportunities. In order to stay ahead in our highly competitive industry, our team of research analysts are constantly investigating the markets in order to identify the best opportunities for our clients.

With regards to our region, Switzerland is one of the most competitive markets worldwide in terms of wealth management and asset management. Nonetheless, we manage to constantly grow our assets under management by offering innovative investment solutions and products to our clients.

As well as our highly innovative investment strategy, our approach towards client services also adds to our armoury in terms of standing out from our peers. Clients are our top priority, and we spend a lot of time with our clients to permanently understand their goals and needs. This enables us to construct “state of the art” tailor made portfolios.

Across the board, we are a people orientated company, and this extends beyond the close relationships we keep with our clients. Our staff are a tightly knit team who share the same values but at the same time bring their own unique skills to the company too. We employ experienced staff and look for a mix of employees with different educational and cultural backgrounds, and in this way we can learn from past experience and benefit from insights from best practice from multiple geographies. Moreover, we ensure that we work in teams so that discussion is possible and the best ideas make it to client portfolios.

Within this environment, our employees care passionately about doing work that helps others. They value teamwork, and they’re always willing to pitch in or stay late if someone is behind on an important deadline. This has led to a culture of trust, friendliness and mutual respect within the team and to much better results for our clients in terms of service and performance. Our people are by far our strongest asset, and we know that the talent and points of view of diverse individuals are what has built our legacy and shapes our future.

Looking towards the future, we are confident that our company will continue to grow and prosper. In the second half of 2016 we are planning to set up a Private Equity Buyout Fund which seeks to finance proven and technology driven businesses in the DACH region. Our cost efficient structure enables us to profitably focus on the micro segment. We expect MBOs/MBIs -because of a lack of succession-and growth financing to be the major drivers for private equity in this segment. Companies at that size often lack to make the best out of clear technology advantages. Therefore, we follow a hands on approach and support our companies not only with capital, but also with know how in specific fields like internationalisation, structure and strategy. This is quite an exciting opportunity for us, and we look forward to see what’s in store for us in the coming months.

Company: Finanz Konzept AG
Name: Florian Agarwalla
Email:[email protected]
Web Address:
Address: Schulhausstrasse 42, 8001 Zurich, Switzerland
Telephone: +41 44 204 34 62

Ones to Watch in Hedge Funds 2016

Ones to Watch in Hedge Funds 2016

24FX Global is an independent family office and a trading, advisory and currency hedging firm for global institutional and HNW clients. We spoke to Andy Schnappberger, MD of the company, to find out more about their company and learn the secrets behind their success.

At our firm, we manage individual accounts in the Forex Market and offer tailor made solutions for an external capital markets advisory, technical research and act more and more as an exclusive advisor for HNW and family offices. In terms of our approach, this is focused on technical and quantitative algorithms that are unlike any that you’ll find at our peers. Moreover, our performance target is over 20% per annum in all market conditions.

In terms of our background, 24 FX Management started as an external prop trading unit of a family office in the Monaco/South of France region at 2002. As a result of the success in our trading, we grew relatively fast, having another two family offices under management and consolidated all of our trading relevant activities in 24FX Management. This meant that all prop trading and capital market advisory was provided as an external firm to these three family offices. After that, our client base expanded, and led us to being involved with smaller FO, prop trading units, hedge funds and HNW with an understanding of risk. Due to our structure, we do not work for the retail sector. While growing even further in the past few years, we partnered with a financial advisory firm to form and to consolidate all trading and capital markets management and advisory, as well as external technical research activities.

Throughout this time, we are proud to say that we still have our very first investors and founding investors as clients or under management, and believe that this is a testament to how important we value long-term client relationships. Our understanding of risk and volatility (and of course the real difference of these two most important factors) as well as the needs of our clients have provided the basis for some very fruitful and long-term business relationships.

Looking closer at the services we provide, our main experience and investment experience lies in global spot FX trading as well as trading in derivatives such as bonds and indices. Meanwhile, we are also partner with family offices who want to build up an active trading arm as well offering tailor made technical research. One of our newer features is that we teach and coach HNW or trading units on several low risk trading tactics. This is if they want to manage some funds on their own or in-house alongside their external or third party investments. We have found that this service has resonated well with our clients, particularly in the Asia and Middle East regions. It is expensive and demanding, but has the possibility to reap some very impressive rewards. However, our main focus is in managing individual spot FX accounts.

Our portfolios are 90% managed in the Forex market. So the main risk and reward comes from actively forex trading. During this process, we discuss with a client the risk tolerance as well as the connected reward and volatility aspects with these parameters. It is between these parameters that all currency risk is managed. In my view, a good managed forex portfolio account should have a good share in everyone’s global portfolio. I believe that the performance opportunities are the best from all asset classes when it comes to technical trading. From my experience, currencies as an asset class can be very much less riskier than other asset classes. Among other factors, it depends on the leverage of the account, and FX can be the performance booster of any account. Therefore, it is extremely important that the risk is completely understood by both the investor and the trader/portfolio manager.

When looking back on our success, I believe that there a number of ingredients that have contributed to our performance. First and foremost, we have an excellent and trustworthy team. Further, we have a philosophy that is against any corporate games and ego trips, and don’t worry about the fancy titles on our business cards. From our perspective, the most important card for a trader should be his/her ATM card. As our industry can be quite intense, the right mind-set when it comes to trading and managing financial markets is fundamental, and you need the willingness to adopt and develop your personality. Perhaps often undervalued in our industry is that every member of our team needs a personal life that is outside of the financial markets. All in all, I believe that an open mind is important as well as surrounding myself with people who share the same qualities and habits.

When it comes to alpha management and pure trading risks, I believe that the quote from Albert Einstein “Everything should be made as simple as possible, but not simpler” speaks volumes.

Company: 24FX Global Advisors
Name: Managing Director Andy Schnappberger
Email: [email protected]
Web Address:
Telephone: Voice: 33 4 8973 2266 / Direct: 49 15902 47 49 47

Ones to Watch in Hedge Funds 2016

Ones to Watch in Hedge Funds 2016

The Bank of Valletta group was first mover on the island to set up a fund administration activity; to this date, VFS still boasts of being the leading firm in fund administration in Malta, representing over 30% of the market in terms of Net Asset Values of funds domiciled and licensed on this island. Malta’s legal and regulatory infrastructure, as well as its permeating can-do mindset has ensured that the funds industry continues to grow from strength to strength, attracting towards it both the setting up of investment funds in Malta (retail and alternative funds), as well as service providers to same. Within this context of a highly competitive fund administration environment, with over 27 companies offering fund administration, VFS has retained its market leadership.

VFS’s philosophy is to deliver services in a professional, timely and accurate manner whilst addressing the demands of our customers. This belief builds upon the creation of long lasting relationships with clients, reinforced by reciprocal trust, commitment and engagement.

VFS Services

Such commitment is further evidenced by the diverse hedge fund strategies serviced by the company, the provision of ad hoc services required by this segment, as well as through our support in assisting fund promoters in choosing the best suited hedge fund framework. Malta’s regulatory framework caters for the diverse risk profiles of investors, whilst addressing the needs arising from the investment managers’ strategies. VFS’s active participation in providing its support in the pre-structuring phase, as well as the on-going management of the licensing processes, is testimony to the company’s commitment to the hedge fund industry’s continued growth and development.

VFS strives to be proactive in terms of the dynamic nature of the market, the growing sophistication of investors, the evolving regulatory framework, as well as the challenges and demands faced by the fund managers. We aim to ensure ease of setting up and running a fund in Malta by offering a one -stop solution approach for structuring of funds, redomicilaitions, cross border mergers and passporting.

The company’s commitment to further support new start-ups and the existing client base is also manifested through the provision of ancillary services, ranging from regulatory reporting for AIFMD, Common Reporting Standards and FATCA, production of fact sheets, monthly management accounts and on-going regulatory reporting. In view that VFS forms part of the largest banking group in Malta, support to this sector takes a deeper dimension, thanks to the provision of custody services, brokerage, opening of bank accounts, as well as hedging arrangements.

Through our holistic approach, our clients are assured of all forms of administrative and related support, allowing fund managers to focus on their own internal core competences: the investment management function.

VFS Achievements

In order to be able to achieve these milestones, VFS invests heavily and continuously in its IT infrastructure and the development of employees, aiming to improve their skills, knowledge and competences. This ensures the provision of a qualitative service and meeting clients’ expectations.

Over the years, VFS’s commitment and reputation have been widely recognised and evidenced through the numerous awards presented to VFS by various specialist entities. These achievements have undoubtedly been validated by our client base, who have also contributed to the growth of the company through their endorsement and recommendations.

Company: Valletta Fund Services Limited
Name: Joseph Camilleri
Email: [email protected]
Web Address:
Address: TG Complex, Suite 2, Level 3, Triq il-Birrerija,
l-Imriehel, Birkirkara BKR 3000 MALTA
Telephone: (356) 2122 7148

Malta's New NAIF Framework Addresses one of the Biggest Issue in Fund Management
FundsFunds of Funds

Malta’s New NAIF Framework Addresses one of the Biggest Issue in Fund Management, MPG says

Malta, together with Luxembourg, is one of the first two jurisdictions in Europe to adopt the new framework and the move is likely to expand its share of the alternative investment funds (AIF) market, marking yet another step in the country’s move to becoming a leading financial centre, Jeremy Leach says.

Under the NAIF framework, product providers are directly regulated rather than their products, so new funds can be launched without the need for pre-authorisation by the regulator. The Malta Financial Services Authority (MFSA) will maintain an updated list of NAIFs in good standing on its website while the AIF manager assumes full responsibility for the NAIF.

Speaking ahead of the annual Finance Malta Conference on 25/26 May, Jeremy Leach commented: “Asset managers often complain that regulation is strangling them. European regulators are notoriously slow in getting authorization and it is the biggest frustration most financial groups have. Time to market is critical when you have competition and the delay with getting authorization through various authorities is commercially compromising.

“This move by Malta is a game changer. It sends out the message that the MFSA is amenable to speeding up the time taken to launch products and it will enhance its share of the European fund market. This new framework is easier, quicker and cheaper without any compromise to the regulatory framework.”

Jeremy Leach says Malta has a number of advantages that are supporting its emergence as one of the world’s most important financial jurisdictions. These include its membership of the European Union and the Commonwealth, its tax framework, both domestically and internationally with 65 tax treaties with other countries and the legislation it has put in place around securitsations means it is the only EU jurisdiction outside of Luxembourg that has the legislation in place to offer these flexible tools.

While some other EU financial centres might attempt to get into the securitisations market, it is far easier for smaller jurisdictions to establish the necessary laws and there are very few principalities that have the same passporting rights as Malta and Luxembourg, Jeremy Leach says.

Managing Partners Group intends to offer securitisations and alternative fund management services to the pan-European market and Malta’s Securitisation Act has been a key factor in its decision to locate there, as well as its other attributes.

Award for Innovation in Financial Law & Best for Alternative Investments - USA
FundsReal Estate

Award for Innovation in Financial Law & Best for Alternative Investments – USA

Marc, tell us a bit about Kutak Rock’s history:

Lieberman: As one of America’s first national law firms, Kutak Rock has been serving America’s investment community for more than 50 years. One of the firm’s founders, Robert Kutak, created the Kutak Commission, the first of its kind to develop a national code for lawyers’ ethics. With over 500 lawyers in more than 17 U.S. states, Kutak Rock has represented nearly every major investment bank and governmental unit in the United States, providing innovative and intensely responsive service to its finance and investment clientele for more over half a century.

The quality of our service and the depth of our expertise have led us to represent clients in nearly every aspect of the finance and investment space. However the firm is especially renowned for its representation of investors in the private markets, and in particular, in the private equity, venture capital, hedge fund, real estate, investment management and public finance fields.

Kutak Rock has over 100 lawyers dedicated to documenting real estate deals, and the firm has an entire team of highly-experienced lawyers who represent institutional investors in private equity, venture capital, and hedge fund transactions. In the past five years alone, the firm’s Alternative Investments Team has documented over $3 billion in transactions.

Who are the lawyers that staff your alternative investments team?

Lieberman: Our highly dedicated and experienced Alternative Investments Team is comprised of lawyers from every facet of the profession (both former large and boutique firm practitioners, as well as those with private and governmental institutional experience) and this enables them to not only know what their clients expect but also to understand what issuers expect and deem to be “market” terms.

I am the leader of the Alternative Investments Team, and am both AV rated by Martindale Hubbell, the international lawyer rating service, as well as designated as a SuperLawyer®. Other Team members enjoy similar ratings. An AV rated lawyer is a lawyer with the highest rating by Martindale, one who rates 5 out of 5 in the categories of knowledge, integrity, honesty, forthrightness and ethics. People designated as SuperLawyers® have been rated as having a skill level among the top 5% of their peers, and I and some of my team members have also been designated by Best Lawyers in America® as having skills which place them in the top 4% of lawyers. I and several of my other Team members are also Board Certified Real Estate Specialists, and as such, are recognized as having special expertise with complex real estate transactions.

The entire Kutak Rock Alternative Investment Team is highly skilled and recognized as one of the pre-eminent investment lawyer groups in the business by their clients, many of whom have provided the firm with glowing endorsements. Being recognized as superior in the profession enables our Team to secure terms not otherwise capable of being secured by other lawyers whose credibility and experience might be questioned.

Collectively the Team comprises well over 100 years’ experience negotiating and documenting deals. They have documented nearly every aspect of the investable spectrum, including management agreements, direct and indirect real estate, hedge and private equity investments and derivatives contracts. The Team is also very experienced in negotiating and documenting international transactions throughout Europe, the Caribbean, and Asia.

How does your team stay abreast of the fast paced development of the law?

Lieberman: As you say, the legal industry is a fast paced market and this experience counts for nothing if staff are not supported in their professional development. As such our lawyers stay ahead of the curve when it comes to legal developments through a multitude of hours spent in continuing legal education. Firm lawyers regularly design and present educational programs and we make sure we have access to the latest electronic data bases and periodicals and government announcements and releases.

Does Kutak Rock participate in the development of the law?

Lieberman: Kutak lawyers regularly assist government officials to design new legislation and address existing legislation that has become ambiguous or outmoded. For example the firm’s lawyers were instrumental in obtaining clarification from the SEC on whether certain governmental officials were required to register as investment advisors, and Kutak lawyers are currently working with investor organizations and government officials to make issuer subscriptions more transparent. Our dedication to public service is a bedrock precept among Kutak lawyers, and every one of the firm’s lawyers is encouraged to dedicate a substantial amount of their time to efforts which improve the profession and the lives of our clients.

Alongside this, as a practice we are always refining our negotiating techniques and terms and in response both to market forces as well as new legislation or regulation or client requests. Nothing is static in our business and therefore the firm has to adapt in order to stay ahead of the competition.

The word on the street is that Kutak Rock is an especially nice firm to work for. Is that true?

Lieberman: The experience and dedication of all of our staff has helped bring clients into the firm, and ultimately driven our success, and therefore we work hard to cultivate a supportive and engaging environment for our employees. Kutak Rock is well recognized as one of the most pleasant national law firms to work for. The firm has created an environment of respect, comradery and care almost unmatched among its peers.

As a result, our personnel turnover rate is far lower than our competitors. The firm is quite diverse, employing a far higher percentage of women partners than almost every other law firm of its size. The firm’s collegial atmosphere aids greatly in providing an environment for its attorneys to reach creative solutions utilizing areas of practice expertise beyond that of the Alternative Investment Team.

Our interdisciplinary approach to problem solving allows us to borrow from other areas of practice, whether that might be public finance, regulatory law, litigation or a host of other legal areas. Accordingly, while we attempt initially to meet specific requirements with “tried and true” approaches, when those are unable to be applied, our attorneys reach out across practice groups and geography to find optimal solutions. This caring attitude carries over to its clients, whom the firm treats as family rather than just “clients.” Thus, Kutak Rock endeavours to respond to client inquiries instantly, not in days, and to always place client interests above the interests of the firm or our lawyers. It is for that reason that many of our clients have retained us for decades.

How do you assist clients to adapt to the always changing financial markets?

Lieberman: Working closely with our clients has provided the firm with a unique and fascinating insight into the U.S. investment market. The environment for institutional investors at the present time is particularly challenging from a number of perspectives, as the low interest rate environment has propelled most institutional investors to seek yield in the private debt markets, but the overwhelming number of funds proposing to exploit those markets makes it difficult for investors to choose which funds will be among those reaching the top quartile in investment returns.

The same concerns over return are evident within equity investing: while some would say the greatest opportunities are now past us, the ingenuity of managers to find new ways to exploit the equity markets seem boundless, but the plethora of funds touting new strategies and opportunities makes it difficult for investors to separate the wheat from the chaff in choosing top quartile funds. As more money chases established top quartile funds, negotiating favourable terms with those funds has become more difficult. While law firms are not in the business of selecting one fund over another, it is especially important to choose a law firm which is sufficiently well-experienced in dealing with top quartile funds to know when to push the envelope on allegedly “market” terms. Kutak Rock is such a law firm, and is especially well-suited to represent investors who expect value for their dollar and refuse to pay the exorbitant rates demanded by the coastal or international law firms.

Ultimately the financial markets are under constant strain from the many stakeholders which comprise them, and we believe that efforts to lobby the government for more regulation will only increase regardless of the outcome of the current U.S. election cycle. Thus, we expect much more regulation from both the SEC and IRS to further define the nature and scope of Dodd Frank, and we also anticipate more pronouncements from the SEC on private fund disclosures, at a minimum.

Kutak Rock is also renowned for its modest fees—how can the firm charge rates one-third lower than its peers and still deliver quality service?

Lieberman: One major challenge our clients are facing is that they are increasingly becoming sensitive to upward pressure on lawyers’ fees, and therefore Kutak Rock has continued to benefit from such fee sensitivity. Our firm’s rates are far below those of our peers, in part due to our comparatively low overhead.

This is due to Kutak’s geographic footprint which focuses primarily on non-money centre cities across the U.S. and our back office operations that are centralised in the Midwestern U.S., where operating costs are far lower than the coasts. This advantage enables Kutak Rock to set fees a full third lower than its peers, but with no sacrifice to quality of service, a fact to which all of our clients can attest. Further, to enable our clients to better manage their legal budgets, we offer to work for flat or capped fees, and a growing number of our clients have taken advantage of these alternative fee arrangements to bring certainty to their strained legal budgets.

Despite this challenge the firm’s long and unblemished experience, coupled with the fact that its fees are one third lower than its competitors means that clients ought to conclude that their best choice for documenting investment transactions is Kutak Rock. The firm documents between $60 million and $300 million of transactions every month for institutional clients who have come to conclude that Kutak Rock is the best alternative investment law firm for their needs.

All existing clients of Kutak Rock will tell you a similar story about the lawyers with whom they work; that Kutak lawyers really care, and that caring translates into excellent and dedicated service which at the prices charged, simply have no comparison in the market.

What does the future bode for your firm?

Lieberman: Looking to the future, the firm will expand to have more offices throughout the U.S as new opportunities present themselves. It is also highly likely that we will strengthen our relationships with firms in Canada and throughout the Americas and abroad and will add numerous lawyers to further deepen our ability to fully serve our clients’ legal needs. The firm is working with securities regulators to assist in the effort to make issuers fully disclose their fees and conflicts to better assure our clients that there will be no surprises in their returns and that effort will continue for the foreseeable future.

Company: Kutak Rock LLP
Name: Marc R. Lieberman
Email: [email protected]
Web Address:
Address: 8601 N. Scottsdale Road, Suite 300
Scottsdale, Arizona 85253 USA
Telephone: (480) 429-7103 (Direct)

Warburg-HIH Invest Strengthens Presence in the Netherlands
FundsReal Estate

Warburg-HIH Invest Strengthens Presence in the Netherlands, France and Spain

They will work on site, heading Warburg-HIH Invest’s new country offices. In the Netherlands, Warburg-HIH Invest has agreed on a regional cooperation for the Benelux countries with Cording. The objective is to build a permanent presence in the respective property markets in order to identify market opportunities more quickly and ensure the accustomed high management standards for the company’s own local properties.

“As an international investment and asset manager, we want to position ourselves even more prominently in relevant markets. As part of this effort, we look particularly to expand our footprint across regional representations in the three countries in order to have our own contacts on the ground and increase our capacities in the respective markets,” says Andreas Schultz, managing director of Warburg-HIH Invest.

Dominique Dudan, a trained economist, will oversee Warburg-HIH Invest’s French business as a managing director from a dedicated office in Paris. She has almost 20 years of experience in the property sector and is a Fellow of the Royal Institution of Chartered Surveyors (FRICS). Prior to this role, Dudan served for four and a half years as president of Union Investment Real Estate France and three years as president of a large private equity family office. She also held leading roles at HSBC Reim, BNP Paribas and ACCOR Hotel & Resorts.

Lueneburg-born Benita von Meding will head the new Warburg-HIH Invest office in Spain (Madrid). Von Meding also has about 20 years of real estate experience with a focus on expansions and transactions in Spain from different positions inter alia with Union Investment Real Estate, Bavaria Bankgesellschaft and Immobilien Team Consulting (ITC), a service provider specialising in shopping centres.

In the Netherlands, Warburg-HIH Invest will cooperate with Cording, an internationally operating asset manager. Cording will advise and support Warburg-HIH Invest from Amsterdam in all future investment activities across the Benelux countries and represent Warburg-HIH Invest as a local contact for market participants and service providers.

Pension Savers Could Lose up to £58

Pension Savers Could Lose up to £58,500 in tax Relief due to Annual Allowance Minefield

Savers currently benefit from tax relieved pension accrual up to the annual allowance of £40,000 for the 2016/17 tax year. However, from 6 April 2016, individuals with “adjusted income” greater than £150,000 will have their annual allowance reduced by £1 for every £2 of excess income. An individual with adjusted income of £210,000 or more will have their annual allowance tapered down to the minimum of £10,000 for that year.

However, individuals, including additional rate taxpayers affected by the taper, can carry forward any unused allowance from the previous three tax years to increase the tax relief they receive. An individual earning £210,000 or more making a personal net contribution of £8,000 in 2016/17 will benefit from £2,000 basic rate tax relief giving a gross payment into their pension of £10,000, plus further £2,500 tax relief via self-assessment as their top rate of income tax is 45%.

By way of an example, let’s consider a self-employed individual who has total earnings in 2016/17 of £400,000, he has made no pension contributions since March 2013 so has unused annual allowances of £130,000 to carry forward. If he decides to make the maximum pension contribution of £140,000, the position would be as follows:

• Contribution (made net of 20% relief at source of £28,000) £ 112,000;
• Balance of additional rate income tax reclaimed from HMRC £ 35,000;
• Net cost of £140,000 pension contribution £ 77,000;
• Total overall tax relief (£28,000 plus £35,000) £ 63,000.

By maximising the use of carry forward of unused annual allowance in this example the individual has benefit from additional tax relief of £58,500 (the difference between the £4,500 and the £63,000).

Brian Davidson, Senior Pensions Proposition Manager, Alliance Trust Savings, commented:

“The tax rules around pensions can be complex and with so much radical change to pensions over the last few years, some savers could easily miss out on tax relief in the new tax year. When the unclaimed tax relief could be as high as £58,500, it can make a substantial difference to retirement savings. When people realise that they are affected by the tapered annual allowance they could be forgiven for assuming that the carry forward rules will not apply which could be a costly error.”

“In addition to the tapering that can reduce an individual’s annual allowance below the full £40,000, there is also the Money Purchase Annual Allowance, which, when it applies, also caps an individual’s ability to make tax efficient contributions to a money purchase pension, such as a SIPP. The Money Purchase Annual Allowance may be triggered depending on how you have taken an income from your pension. However, unlike the tapering, once the Money Purchase Annual Allowance applies, it is no longer possible to utilise carry forward.

There is also the Lifetime Allowance – the total amount you can hold in pensions without being subject to tax – which reduced this month from £1.25million to £1 million. With all these different rules, pension saving is one area where seeking professional advice to maximise your tax relief can really add value.”

Tri-Annual Outlook

Tri-Annual Outlook, April 2016 Update

After raising rates for the first time in nine years, the Fed has held back from further hikes in 2016, bowing to market tantrums. The Fed is struggling to focus on the strength of domestic fundamentals such as the strong labour market or increasing inflationary pressures and is reluctant to move too far from other central banks that are still in easing mode.

James Butterfill, Head of Research and Investment Strategy at ETF Securities said:

“The risk of waiting too long to raise rates is greater uncertainty. Such a situation seems circular, with markets fretting over Fed decisions and the Fed concerning themselves with market volatility – an issue outside the scope of its mandate.”

“Real GDP trends indicate that the pace of US economic growth is solid. While the growth path of real GDP is not as strong as pre-crisis levels, there is no evidence of a slowdown. Such a growth path warrants tighter monetary policy. Without a monetary check on inflationary pressures, even a gradual one, expectations threaten to become unanchored, something that only aggressive rate hikes can then cure. We believe that the current guidance on rate hikes will be insufficient to rein in prices and could lead to the Fed having to tighten more aggressively later in the cycle. This could lead to further unintended consequences.”

Key trends to highlight:

A global economic recovery is likely to provide a tailwind for industrial precious metal prices (silver, platinum, palladium)

Part of the reason that these industrial precious metals have been falling since 2011 is due to China’s moderating demand, as it adjusted to a slower pace of economic growth. However silver, platinum and palladium have started to recover this year, rising 14%, 11% and 7% respectively and we expect demand for these metals will likely continue as China’s industrial output appears to have found a base.

Furthermore, all three of these metals have been in a supply deficit during the past three years. 80% of platinum and close to 40% of palladium are produced in South Africa and as the Rand depreciation abates and miners cut back on activity, supply deficits for these metals are likely to grow.

Central bank policy remains a supportive influence on gold

Along with the Swedish Riksbank, Danish National Bank, Swiss National Bank and the Bank of Japan, the ECB has adopted a policy of negative interest rates (NIRP). We argue that NIRP, whether in nominal or real terms, is positive for gold prices. Historical data suggest that there is a relationship between negative interest rates and the gold price. Gold has risen more than 15% year-to-date and is likely to rise further as US inflation increases.

Emerging Markets sentiment improves

While emerging markets (EMs) have been in the doldrums for some time, pessimism around EM bonds is overdone. Investors are being overcompensated for emerging market credit risk and this presents a buying opportunity. The emerging market bond yield spread over Bunds stood at 4.6% and emerging market bonds yields show less volatility than US High Yield bonds. By contrast, yields on many money markets hover around 0%, and yield spreads of US Investment Grade Corporate bonds over Bunds stands at 3.1%. Investing in EM bonds remains compelling in our view, as valuations appear cheap.

An upturn in EM bond demand will also have a positive impact on their respective currencies. EMs are a heterogeneous group. On the premise that investor flows search for returns within high growth and low inflation economies, emerging Asian currencies appear to be the best placed for strength in 2016. However, emerging Asian currencies do appear overvalued and from a valuation perspective we favour emerging European countries as they have relatively low levels of debt compared to their Latin American and Asian counterparts.

The recent equity market sell-off highlights an opportunity in Cyber Security

Cyber security is better positioned than overall technology, because the subsector benefits from a more diverse revenue stream owing to a wide range of products that appeal to a large customer base. Cyber security incidents are growing at a compounded annual growth rate (CAGR) of 66% since 2009,and are transpiring into profitability for cyber security companies.

The global equity market rout since the start of 2016 failed to spare cyber security stocks, but it brings their relative valuation versus the technology sector down to their historical average rather than the 70x price to earnings perspective (P/E) witnessed in December 2015.

The distinctly low beta in Cyber security stocks allows investors to get exposure to one of the fastest growing segments of technology at a comparatively low risk. The record investment in financing and deal making in 2015 is testament to the opportunity cyber security presents.

Rising ETP Industry flows

ETFGI’s March 2016 global ETF and ETP preliminary industry insights report highlights ETF Securities’ impressive performance since the start of the year, having amassed the second largest share of net ETP inflows in Europe at US$2.11 billion.

Mark Weeks, CEO at ETF Securities commented:

“During Q1 2016 we have seen strong inflows across our diverse European product range, including $2.06 billion into our commodity complex, of which $1.56 billion was into gold. Alongside our in-depth market research and commitment to investor education, this reinforces our position as the leading specialist ETP provider in Europe

“As reported in the Outlook, we believe that despite recent market turmoil, compelling opportunities continue to exist for investors and we continue to work hard, often in partnership with leading third parties, to make these opportunities across commodities, FX, thematic equities and fundamental fixed income available to all European investors.”

Hedge Fund Manager of the Year 2015 - USA

Hedge Fund Manager of the Year 2015 – USA

Exception Capital was born out of a family office structure, and as such our work revolves exclusively around the management of The Family Fund and ensuring we generate the best risk managed returns possible for investors. Currently the firm’s AUM stands at $42mm.

Launched in 2012, the Family Fund is a unique global multi-strategy portfolio that is designed to mimic the asset allocation of a classic Family Office. As such the fund invests globally in public equities, private securities, direct lending structures as well as external niche alternative managers.

Diversified by geography, asset class and positions it has, since inception in Q3 2012, outperformed all benchmarks and indices but with lower volatilities and reduced correlations.

The fund seeks to uncover ‘below the radar’ investment opportunities which our competitors misprice, misunderstand, overlook, disregard or simply cannot access. Since inception the fund has appreciated over 51% and has average annualised returns of approximately 14%. In 2015 the fund returned an impressive 12.4%

We consider this fund to be completely unique product in the marketplace, as no one else as of yet has developed such a hybrid structure.

Another means by which we differentiate our business from that of our competitors is our strong returns. This business is a performance business and the risk-adjusted returns are how we are all measured against our peers and, where applicable, benchmarks.

As a company we stand out on all those measures, and our ability to consistently generate returns for our
clients from multiple sources has been particularly satisfying over recent years. In Q4 of 2014 it was adding to oversold positions in the downturn that got us through a tough October; last summer we took one of our private positions public on the London market; in 2015 our basket of Argentinian ADR’s has produced excellent returns, as have our UK smaller company names and external managers.

With regards to risk we take a view that you have to take some degree of risk in order to create returns. We don’t put ourselves forward as risk free as we would not be able to generate the returns we have if we were. However, we do operate robust risk management controls and the main driver of which is diversification of the portfolio by strategy, geography, number and size of positions. This strategy has proved very effective and provided us with minimal correlation with the markets.

The fund operates on a global basis and it is my experience of living and working in Asia, Europe and the US and the networks developed that have come to bear on the portfolio.

The opportunities available within these markets provide us with an exciting challenge. When you have a global universe as your opportunity set it is important to develop the skill to rapidly cut the wheat from the chaff. Developing and maintaining networks, finding and researching opportunities and realising the value in those opportunities is what drives us. 

This is reflected in our mission statement: “We aim to deliver consistent mid-teen returns with upside volatility supported by a corporate culture underpinned by integrity and trust.” These principals pervade throughout everything we do, and ensure that we are always on the best possible terms with our investors and delivering strong returns.

Moving forward we intend to continue with our current strategy. We have proved over a number of years that our repeatable process works and we will stick with that. The year ahead means more hard work finding and working on opportunities and turning those opportunities into hard performance numbers.

I have seen so many fads come and go over the years that I have come to believe that we are best developing our business on what we do best.

From a business perspective we will be looking to grow the assets under management and the infrastructure of the firm. I have sat across from many hedge fund managers over the years and have seen so many with say $50m under management and based on that an all-encompassing infrastructure – numerous analysts, a good sized office, numerous Bloomberg screens etc. A few poor months of performance and it becomes impossible to raise AUM and as result they soon go out of business. I have always said I would grow the infrastructure as we grow the AUM. I consider
this to be prudent business practice and it considerably de-risks an investment in the Family Fund.

Hedge Fund Manager of the Year

Hedge Fund Manager of the Year

The world of investment management has never been more competitive, and so it was refreshing to speak with Andrew Sandoe, Chief Investment Officer for Fidelis Capital. Andrew said unabashedly, that Fidelis (from the Marine Corps motto Semper Fidelis) is an extension of the service orientation espoused in the US military. “At Fidelis, our mission is to offer our investors greater economic opportunity and lower stress by delivering consistently high risk adjusted returns.” Fidelis uses a quantitative value strategy that historically has offered 15 – 20 percent annualized returns with about 18 percent of the risk of the S&P 500. Andrew describes Fidelis’ stock-picking differently, by quoting Mohnish Pabrai: “Heads – we win, tails – we don’t lose much.” This confidence led Fidelis to offer an almost unheard of zero management fee structure, where Fidelis only thrives by delivering profits, above a hurdle rate, to investors.

To achieve these results, Mr. Sandoe focuses on two primary jobs within Fidelis: rigorous portfolio analysis and assembling the top talent in the field. He notes, “My first and primary job is managing the portfolio in a way that maximizes long-term, risk-adjusted returns. As for the team, he adds that he is truly inspired by those on Fidelis’ close-knit team. The founding team came together while pursuing graduate work at MIT. Concurrently with their founding, they began working with three top faculty members, two of whom authored some of the seminal research in the quantitative value space. To this strong academic core, he added team and Board members who had each spent 30+ year careers in applied investment management.

As for the thinking behind Fidelis’ strategy, Mr. Sandoe relies on hard lessons learned during his career as a pilot in the Marines. Through several combat deployments, Mr. Sandoe saw how people functioned under significant stress. He noted that “most people make terrible decisions while under the influence of emotion or duress. This is equally true in the stock market.” This experience was empirically validated in the research of Daniel Kahneman. Recognizing the inherent risk of emotion based decision -making, Fidelis developed a systematic process which strips out human bias and emotion.

Mr. Sandoe and his team began their research in 2012 by proving that value investing was the single best performing investment strategy across US market history. The Achilles’ heel to this method is human bias and emotion, particularly our need for immediate gratification. With this in mind, Fidelis developed a systematic process that corrected for the unhelpful tendencies inherent in human nature. Fidelis’ process allows them to filter the entire investable universe down to an extremely high potential portfolio of stocks.

The filters include eight core tests:

• Value – Cheap stocks relative to the potential returns they could generate.

• High and improving financial quality – Well capitalized, low debt, improving fundamentals.

• Conservative accounting – no earnings or accounting manipulation.

• Value Traps: Is the company cheap for a good reason?

• Insiders: Are the insiders buying back shares in their personal accounts?

• Systemic risk: Is systemic risk supportive of equity gains?

• Momentum: Is the market momentum supportive of equity investment?

• Asymmetric upside: Is there at least 5:1 upside opportunity vs. downside risk?

The result of this process has been consistent outperformance of the indices and happy investors. In any competitive occupation, whether professional sports, investment management or the military, being able to deliver consistently is paramount. The ability to delay gratification in order to achieve a larger reward at a later time is crucial to long-term success. Many investors undermine their investment performance with a short-term orientation, recency bias, and loss aversion (to name a few). Fidelis uses its rulebased approach to avoid these common traps.

In a world where central banks have put a floor under asset prices (via the artificial stimulus of Quantitative Easing “QE”), there has been no need for hedge funds. Since early 2009, markets have moved almost entirely in one direction. However, since QE ended, volatility has returned to the market and hedge funds are once again showing their value. As Seth Klarman (Baupost Group) loves to reference, an investor who earns 16 percent annualized returns over a decade will retire at the end of it with more than a similar investor who earns 20 percent for nine years and then loses 15 percent in a market correction. If markets continue to revalue to reflect a post-QE, rising interest rate, high valuation environment, we can expect that hedge funds will continue to grow as they protect investors from heightened equity risk.

Within this industry, competition will remain fierce. However, when you look at risk-adjusted returns (Sharpe ratios) across hedge fund strategies, one can identify the good stewards of client assets. This industry attracts more than its fair share of snake oil salesman, but a knowledgeable consumer should look at the amount of risk managers are taking in pursuit of compelling gains. The vast majority of managers are simply trying to achieve gains through leverage, and these strategies are ultimately doomed to fail.

A consumer is better served by identifying managers with two or three verifiable edges, who can consistently buy high quality companies at cheap prices, and has the patience to wait while market prices shift to reflect the portfolio’s fundamental health. Investors that stick to these timeless (and empirically proven) methods are likely to be very satisfied.

Fidelis employs timeless value investing principles, but applies them using cutting edge quantitative tools, in order to identify high potential companies that may have been dismissed by the market. Essentially they are front-running market expectations. They acquire companies when markets are convinced that they will languish forever, but only do so after the company’s fundamentals indicate robust health. This has worked well in 2015, a year many said was the most challenging of their careers. We expect that since humans do not change much value investing will continue to deliver strong risk adjusted returns, and will remain as unpopular as ever.

Name: Andrew Sandoe
Company: Fidelis Capital Management
Phone: 781-990-1861

Asset Manager of the Month

Asset Manager of the Month

Auscap was founded by myself and former colleague Matthew Parker in 2012. Matt and I had previously worked
together managing proprietary capital for Goldman Sachs, and as such have considerable experience in and knowledge of financial markets.

The firm is focused on capital preservation before return generation. This approach is borne from both the background, experience and natural biases of the portfolio managers.

Auscap’s overall investment objective is to generate strong absolute returns with low correlation to equity markets. The firm manages one fund – the Auscap Long Short Australian Equities Fund.

The fund uses a value based approach, searching for companies that exhibit certain characteristics, including strong Return On Invested Capital (ROIC), Return on Assets (ROA) and cash flows, a sensibly geared balance sheet and businesses with a competitive advantage.

We then invest in these businesses when they occasionally trade at what we believe to be attractive prices. Typically we do not invest in early stage emerging industries, or in fields where we have a clear knowledge and/or information disadvantage compared to other industry experts or market participants.

We would rather invest in businesses that we think we understand and have typically been around for some time. We do try to keep abreast of news materially affecting the earnings of the stocks that we own given our analysis is quite data driven. We remain consistent in our investment philosophy and process, irrespective of changing industry dynamics.

Risk is controlled in the furd through retesting our hypotheses around poorly performing positions, far more time than we spend assessing positions that are acting in accordance with our expectations. In this way we manage risk by managing where we might be wrong or where the market is telling us that we are incorrect in our analysis. Ultimately the fund will experience volatility given it is exposed to equity prices which can fluctuate significantly.

However we would be disappointed if the fund did not have significantly less downside volatility than the market over time, both because of our value bias on the long investments and our ability to take short positions to protect the portfolio in the event of broad negative moves in the stock market.

Ultimately a fund manager is judged by its performance, and therefore maintaining strong returns is key. Since the fund’s inception in December 2012, the fund has achieved strong returns for its investors, annualizing 33.1% per annum, with annualized volatility of 11.3%, a Sharpe ratio of 2.40 and a Sortino ratio of 4.81.

Investor relations is also a key aspect of our work, and one we take very seriously. We think of our clients as our partners, and therefore we are keen to find like-minded investors, those who share a value based investment philosophy, so that we can build fruitful long term relationships. We try to treat our clients in the manner that we would want to be treated were the roles reversed.

In order to achieve this we always try to clearly communicate our investment approach with all current and prospective investors. We do this though our monthly newsletter, which provides us with an opportunity to both report the performance of the fund and discuss a subject that we have found interesting in our research and analysis of the market. Through the newsletter and other investor communications we hope to attract the right long term partners.

We have a high focus on our staff, as we believe that culture is critical within an organisation. When hiring staff we take the view that the type of person is more important than the resume. We look for people who share the firm’s values: personal and professional integrity; humility; an approach of treating everyone they meet with the same positive attitude and engagement; and a drive to maintain high standards of performance.

Despite striving for excellence we believe that we have a very positive culture within Auscap. We believe building culture is about hiring the right people and leading by example. If you create the right role for the individual, give them appropriate responsibility and yourself act in accordance with the firm’s stated standards, these things foster the right behaviours. The organisation, employees, service providers and clients all benefit from a strong positive culture.

Looking to the future, our vision is to create a leading funds management business that has a reputation for consistent outperformance, strong risk management, a positive culture and integrity. Ultimately Auscap’s objective is to generate long term wealth for our investors. In 2016 we hope to continue to expand our investor base with the right people, grow the firm and deliver for our investors.

Contact Details

Company: Auscap Asset Management Limited

Name: Tim Carleton

Email: [email protected]

Web Address:

 Address: Level 24, 9
Castlereagh St, Sydney, NSW 2000

Telephone: 61 2 9238


MFA, AIMA File Comment Letter on SEC Derivatives Rule

While generally supporting several aspects of the SEC’s proposal, including asset segregation requirements and an activities-based approach to regulation, the Associations have concerns with the adverse effects of the rule’s imposition of a new notional-based leverage limit on registered funds.

The letter also questions the SEC’s attempt to redefine and regulate derivatives as “senior securities” under Section 18 of the Investment Company Act of 1940.

MFA President and CEO Richard H. Baker said: “Both institutional and retail investors have shown increasing demand for registered funds that offer alternative strategies using derivatives. Many of these strategies provided substantial benefits to investors during the global financial crisis and continue to do so today. While we support many aspects of the SEC’s proposal, the Commission’s policy objective to protect investors would be well-served by establishing a better balance between authorizing funds to use derivatives for hedging, risk-mitigation and investment purposes, and imposing reasonable, practical restrictions that address the risks derivatives may present to funds and their investors.”

AIMA CEO Jack Inglis said: “Basing funds’ portfolio exposure limits on the aggregate notional amounts of derivatives transactions is too blunt a measure, and will force many funds that do not, in fact, have a material amount of risk due to leverage to substantially alter their strategies or de-register without good reason. This outcome will have the potential unintended effects of limiting investor choice and undermining investor protection by depriving investors of opportunities to invest in alternative mutual fund strategies and their potential benefits.”

The letter suggests alternative options for the Commission’s consideration and provides qualitative and quantitative support for the Associations’ main concern – that a new notional-based limit is “unnecessary and inappropriate, because it lacks sufficient justification given the practical effect of the Commission’s proposed asset segregation requirements and the potential reinforcing effect of the Commission’s other related regulations after their adoption.” The letter also notes that basing a fund’s portfolio leverage limit on the aggregate notional amount of a fund’s derivatives is too blunt of a measure because it has inherent problems as an accurate measure of risk and leverage.

To address these and other concerns with the proposed rule, the Associations make several recommendations in their letter, including that:
• A broader scope of liquid assets with appropriate regulatory haircuts be allowed as qualifying coverage assets for asset segregation purposes – rather than restricted only to cash and cash equivalents – so the proposed rule would not strain a fund’s ability to hold sufficient cash and cash equivalents in reserve to satisfy the payment obligations under its derivatives transactions;
• A fund’s board should be authorized to base the proposed risk-based coverage amount on no less than the required initial margin for each of the derivatives transactions in the fund’s portfolio;
• A fund should have the flexibility to determine which types of derivatives transactions may properly offset other derivatives transactions in calculating derivatives exposure. For example, a fund should be permitted to offset a futures contract against an option, if the offset reduces exposure and risk; and
• If the Commission decides to impose a notional-based limit in its final rule, the letter explains the merits of allowing funds to use risk adjustments to notional exposure based on a derivatives transaction’s underlying asset class to determine more accurate measures of a fund’s actual derivatives exposure.


UK’s Failing SMEs fall into £1 billion Funding gap

UK’s Failing SMEs fall into £1 billion Funding gap, Despite £126 Billion in Untapped Private Investor Finance

• Over a third (34%) of investors with more than £100,000 in investments would invest in the UK’s SMEs but do not have the knowledge to do so – equating to £126 billion in untapped private investment finance
• Of those who intend to invest between £100,001 and £250,000, 64% would consider using the Enterprise Investment Scheme (EIS)
• Just 9% of UK investors said they would consider investing in SMEs and have the knowledge to do so
• The £1 billion funding gap affecting Britain’s scaling SMEs that David Cameron has previously acknowledged was not directly addressed in 2016 Spring Budget
• Investor sentiment towards private equity investment is resoundingly positive: more than half (54%) of UK taxpayers with an investment value over £40,000 would consider investing through the EIS for the 2016/17 financial year
• Investor sentiment towards small and medium enterprises is high, with 71% of investors with over £40,000 worth of investments saying they are confident in the growth capabilities of UK SMEs

Over a third (34%) of the UK’s serious investors – with more than £100,000 in investments – would invest in SMEs but do not have the knowledge to do so. This equates to £126 billion in untapped private investment funds. The lack of awareness is despite the fact that 71% of private investors with over £40,000 worth of investments feel confident in the growth capabilities of UK SMEs and 54% are looking to the Enterprise Investment Scheme (EIS) for the new tax year.

Research launched today by private equity firm IW Capital across 2,000 UK adults and investors reveals that billions in vital development finance is left inactive due to a lack of investor knowledge. This is despite David Cameron’s 2015 pledge to fill a £1 billion funding gap that is preventing the growth of UK SMEs, fuelled in part by institutional lending reducing at a rate of £5.7 million a day. Osborne’s latest Spring Budget focused heavily on the micro-businesses of Britain’s private sector, but did not do enough to educate high-net-worth individuals as to how they can invest in upscaling SMEs.

Given the high levels of confidence and subsequent intentions ahead of the imminent new tax year on April 6th, the research further analysed investor sentiment towards one of the last private equity initiatives supporting SMEs – EIS – with 64% of investors who intend to invest between £100,001 and £250,000 looking to this scheme for their investment plans. Over of half (54%) of investors with over £40,000 in portfolio size (not including their mortgage or pensionable assets) will do so imminently for the 2016/17 financial year.

In his eighth Budget under Conservative power, Osborne addressed the nation with a directed agenda for business, aimed at “lighting the fires of enterprise”. That said, little was announced to specifically address a finance deficit – billed by Cameron as a “valley of death” funding gap – crippling UK SMEs who are faced with transitioning from fledgling start-up into thriving mid-size enterprise. With the majority (55%) of small and medium-sized enterprises failing to survive more than five years, today’s research unveils a vast pool of available investment finance left untapped, despite investor sentiment indicating high levels of confidence and financial intention in support of UK SMEs.

When analysing the sentiments of the 2,000-strong national sample further, Osborne’s Spring Budget is particularly pertinent. Predominantly addressing mid-earner taxation – with those earning under £45,000 removed from the higher rate tax threshold – those who do fall into the higher and additional rates of payment were relatively overlooked. Accounting for 16% of the UK taxpayer population, this high-earner group contributes a disproportionate 67% of the country’s income tax bill. IW Capital’s nationally representative research examines just how much income tax the UK’s high-earners pay in comparison to the national average, with a focus on specific investor sentiment towards one of the last remaining tax relief initiatives – EIS. The research was also commissioned to establish investors’ 2016/17 tax planning agenda, and is supported by qualitative insights from Sarah Wadham, the Director General of the EIS Association.

The Taxpayer Sentiment Report 2016, based on an independent survey of over 2,000 UK adults, reveals:
• The average amount of income tax paid in the UK in the 2014/15 tax year
• How much more income tax is paid by Britain’s serious investors
• The sentiment UK investors hold towards EIS
• The monetary amount – over the next ten years – investors intend to work with
The key findings include:
• Over a third (34%) of investors with more than £100,000 in investments would invest in the UK’s SMEs but do not have the knowledge to do so – equating to £126 billion in untapped private investment finance
• Of those who intend to invest between £100,001 and £250,000 over the next ten years, 64% would consider using the EIS
• Fewer than one in ten (9%) British investors who would consider SMEs as an investment option have the knowledge to act on their intentions
• The £1 billion funding gap affecting Britain’s scaling SMEs that David Cameron has previously acknowledged was not directly addressed in 2016 Spring Budget
• Investor sentiment towards SMEs is high with 71% of investors with over £40,000 worth of investments saying they are confident in SMEs to drive economic growth
• Investor sentiment towards private equity investment is resoundingly positive: more than half (54%) of UK taxpayers with an investment value over £40,000 would consider investing through EIS for the 2016/17 financial year
• The average income tax bill for the 788,000 people in the UK who earn over £100,000 – the top 2.7% of the British taxpayer population – is £81,700
• Investors with over £40,000 worth of investments pay an average £26,058 in income tax – more than four times the national average
• Of those Britons who currently have investments, £81,950 is the average ideal investment size over the next ten years
• Two thirds (66%) of respondents whose ideal investment size over the next ten years is between £42,001 and £100,000 would consider EIS
• On average, investors who currently have more than £100,000 worth of investments said their ideal investment size over the next ten years is £210,468
• A higher proportion of males compared to females would consider EIS (60% vs. 44%)
• The youngest age group is more likely to consider the investment scheme compared to the older age group (91% of 18 to 34s vs. 28% of 55+)
• Over four-fifths (84%) of Londoners would consider the scheme

Sarah Wadham said: “It is great to see many investors considering EIS, but it is important they act on these intentions. There are very few legitimate ways you can mitigate income tax while investing in exciting businesses, but investors should be aware that EIS is a legitimate, government-sponsored form of tax planning. Schemes such as EIS are extremely important and contribute a huge amount to the economy – they need to be protected and looked after.”

In response to the research, CEO of IW Capital Luke Davis, said: “Despite containing some positives for business, the 2016 Spring Budget failed to adequately address the critical issue of development funding for Britain’s upscaling businesses. Our research shows that investors are confident in the growth capabilities of UK SMEs and are considering investment through EIS, but many do not know how to execute these plans. The result is a huge pool of untapped potential investment funds. I was disappointed at the lack of policy supporting alternative finance, especially in light of its vital contribution to economic recovery.

“Today’s research reiterates the importance for service providers and government to raise awareness, education and accessibility around the EIS. The investor intentions revealed are encouraging, however the infrastructure needs to be in place – both in regard to taxation and access to finance – for this to manifest into tangible support for Britain’s rising enterprise and long-term economic prosperity.”

Boost Launches Volatility and Emerging Markets ETPs on Borsa Italiana

Boost Launches Volatility and Emerging Markets ETPs on Borsa Italiana

The new ETPs come on the back of increasing demand for Boost’s Short & Leveraged ETPs. As of 10 March 2016, ETPs issued by Boost reached almost $500 million in AUM[1] and these new ETPs add more breadth and depth to Boost ETP’s already comprehensive product list. At the beginning of March 2016[2], Boost ETPs had some 55% market share with respect to all ETC contracts traded on the Borsa Italiana. Boost has the most actively traded product and four products in the top ten most actively traded products on the Borsa Italiana’s ETFPlus segment[3].

Boost is listing the first product offering leveraged exposure to the benchmark VIX volatility index in Italy. The Index measures the return from a daily rolling long position in the first and second month VIX futures contract. The S&P 500 VIX Short-Term Futures Index ER is considered a useful tool for hedging against potential large and sudden drops in the US equity market and, historically, has had a negative correlation to the S&P 500.[4] The Boost S&P 500 VIX Short-Term Futures 2.25x Leverage Daily ETP provides 2.25 times the daily performance of the Index, adjusted to reflect fees and costs inherent to maintaining and rolling a leveraged position in the futures, plus interest revenue earned on the collateralised amount.

The Boost Emerging Markets ETPs provide 3x long and 3x short exposure to the Emerging Equities Rolling Futures Index, which tracks Front Quarter and Second Quarter MSCI Emerging Markets Index futures. The MSCI Emerging Markets Index futures provide exposure to the MSCI Emerging Markets Index, a free float-adjusted market capitalisation index designed to measure the equity market performance of the following 23 emerging markets countries: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Russia, Qatar, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. With 835 constituents, this index covers approximately 85% of the free float-adjusted market capitalisation in each country covered.

The Boost Emerging Markets 3x Leverage Daily ETP and the Boost Emerging Markets 3x Short Daily ETP provide three (3) times long and (3) times short (respectively) the daily performance of the Index, in both cases adjusted to reflect fees and costs inherent to maintaining and rolling a leveraged position in the futures, plus interest revenue earned on the collateralised amount.

Boost’s S&L ETP platform now covers the world’s major asset classes, which include equities, volatility, fixed income, currencies, and commodities. This brings BOOST ETP’s product range to a total of 128 listings on Borsa Italiana, the London Stock Exchange, and Germany’s Xetra.

Viktor Nossek, Director of Research at WisdomTree Europe, commented:

“This years’ volatility underpinned by China’s slowdown and slumping commodities has soured sentiment in risk assets, forcing global growth expectations down and creating opportunities to position bearishly in equities. US equity markets’ relative high exposure to tech stocks suffering from recent disappointing financial results and downgraded growth expectations has added to the rise volatility in the US equity markets. With a leveraged S&P 500 VIX futures ETP, investors can short term efficiently position around rising risks in equity markets by using less capital to obtain the same (unlevered) exposure or amplify their exposure with the same capital.

“The geared long and short ETPs tracking Emerging Markets are a way to position tactically around the uncertainty in the region, as 2016 begins with a stark divergence in the outlook on growth within the region: Russia and Brazil are in recession, China’s politically orchestrated rebalancing is enforcing an economic slowdown, even while India still sustains a boom. However, much of these expectations remain driven by volatile commodity prices, and the recent rebound of crude oil is giving EM commodity exporter stocks another boost. Until the dust settles and the economic picture for the region stabilises, investors may look for short-term opportunities to trade in and out, or hedge their EM exposure which, using leverage, requires less capital to achieve. These new products provide investors with a new set of momentum and hedging opportunities within the Boost S&L ETP range”.

Nik Bienkowski, Co-CEO of WisdomTree Europe commented:

“Boost, as an issuer, is delighted to be at the forefront of meeting demand from clients to extend our already market leading range of ETPs in the Italian market. These new products provide additional diversification opportunities and solutions to allow our clients to manage their portfolio exposures. These exciting new listings help build out our coverage across all the key asset classes including a unique exposure to equity volatility.”

[1] Source: WisdomTree Europe, as at 10/03/2016.
[2] Source: Borsa Italiana, data for the week 29/02/2016 -04/03/2016.
[3] Source: Borsa Italianasd
[4] Source: S&P Dow Jones Indices LLC

Defaqto Launches 'The case for hybrid'

Defaqto Launches ‘The case for hybrid’

The case study explores the differences between blended solutions, in which two or more individual products are implemented side by side, and hybrid solutions which offer flexibility and security in one simple arrangement.

Gillian Cardy, Insight Consultant (Wealth) at Defaqto who wrote the study commented:

“Numerous studies are continuing to demonstrate that clients value secure income in retirement, but that they are also interested in benefiting from many of the flexibilities introduced by last year’s pension reforms.

“The practical issue that advisers have to confront is how to offer such advice in a cost effective way, especially for those with more modest pension funds who would typically have been advised to purchase annuities and for whom the cost of more bespoke advice strategies may have been prohibitive.”

The publication is free to download here.

CFO of the Month Kepner-Tregoe - William B. Baldwin

CFO of the Month Kepner-Tregoe – William B. Baldwin

Kepner-Tregoe’s core business is bringing critical thinking capability to organizations through either training or consulting. For this process, their consulting projects involve applying their own expertise to resolve difficult client issues and to deliver specific agreed upon results.

“We are much more than just a training company—we are a capability development company,” says Baldwin. “Our extensive experience tells us that training is one part of this development. But first we must seek to understand what problem clients are trying to solve and provide a complete solution for that problem. Our competitive advantage comes from the fact that critical thinking matters and can deliver significantly improved results to organizations that employ it well. We strongly believe that no other organization does critical thinking capability development better than Kepner-Tregoe.”

As CFO of Kepner-Tregoe, Baldwin manages the company’s finance, legal, IT and certain aspects of the HR functions. He is also a member of the company’s Board of Directors and Global Leadership Team. “My responsibilities include financial planning and reporting, banking, financing, tax strategy and much more,” says Baldwin. “Over the summer, I had the opportunity to manage our operation in Japan on an interim basis which was a great experience from a business and cultural point of view.”

Over the past few years, Kepner-Tregoe has made many major investments. These include geographic expansion into China, Western Australia and Western Canada, as well as investments in consulting resources—primarily in hiring and capability development, product development, and IT systems and infrastructure implementation. “When choosing where to invest, each of our decisions involve elements that must be considered, evaluated and incorporated into our strategic and financial planning. At the same time, we also have to balance these investments with the overall financial and operations management of the company.”

In addition to these investments, Baldwin has also helped Kepner-Tregoe provide deeper opportunities for KT employees. This includes the implementation of a new ownership model through the introduction of a restricted stock plan. According to Baldwin, this “has expanded the number of employee shareholders from 15 to 50 over a three-year period and refinanced the company’s bank facilities, which ensures capital availability, when needed, at an effective cost. I have also continued to develop and modify our employee incentive plans to balance employee performance and company growth.”

Across the board, KT employees are extremely passionate about the impact their proven processes have had on supporting organizations over nearly six decades, particularly KT’s flagship problem solving and decision making methodology. “We are immensely proud of our processes and the benefits that it brings to our clients,” says Baldwin. “Believe it or not, it was actually KT’s methodology on problem solving that allowed NASA to save the astronauts from Apollo 13. It is a story that everyone in our company loves to tell because it illustrates the type of impact KT processes can have when executed well.”

In order to ensure that their high standards of service are maintained, KT implemented a set of Basic Beliefs that guide the organization. It is this set of Basic Beliefs that provide the framework for KT’s employee recognition, awarding those who go above and beyond. “Unlike many other professional service firms, KT has an extraordinary retention rate,” explains Baldwin. “I believe this is a testament to the passion our employees have for our products, the value we deliver to clients and the culture we have built over the years.”

Throughout the years, there have been many significant changes in the company’s operations, some of which have been internally driven through changes in strategy, structure and leadership. Other changes have been externally driven, particularly the financial crisis in 2008 and 2009.

“The Global Financial crisis dramatically affected our business,” says Baldwin. “So much so that our revenues declined by 32 percent between Q4 2008 and Q1 2009. However, we reacted very quickly through a number of cost containment actions. They say ‘never let a crisis go to waste’ and we fully embraced this crisis to create many positives that remain in place today. This includes our variable compensation and workforce models, quarterly incentive plans and more effective utilization of our consulting resources. Today, we remain very diligent as to how we manage our cost structure and measure what investments we choose to make in the business.”

According to Baldwin, the crisis also reinforced the importance of maintaining a strong balance sheet and building cash reserves to ensure the financial stability of the business. “It’s not a question of if another financial crisis will occur but when,” Baldwin explains. “So it’s important to ensure that your organization is prepared, and we set cash reserve goals and continue to work towards achieving those goals as well as minimizing debt for operating cash flow purposes. In fact, we have been debt free for operating cash flow purposes for the last five consecutive years.”

Working within in a highly competitive consulting and training landscape, Kepner-Tregoe understands it must stay nimble to continuously improve its approach as well. That is why Baldwin views change as something that is positive and will only serve to improve their overall services. “While people and organizations are generally resistant to change, or slow to adopt to change, I have learned that change is a necessity and can be very positive if the changes are clearly communicated, well implemented and supported by leadership across the company. Organizations and their people, particularly in today’s business and economic climates, must be quick to understand the need for change, identify what changes are required and to implement those changes in a rational manner enabling individuals and organizations
to grow and thrive.”

It is this level of responsiveness that has enabled Kepner-Tregoe to weather a dynamically changing world over nearly 60 years in business. Baldwin believes the consulting arm of the business has been particularly adept at helping the company identify, and solve, critical issues. “Our consultants are in the trenches helping clients resolve business issues that are affecting them today or will affect them in the near future. Communication between our global resources, as well as with our marketing and products group in Princeton, help keep us at the forefront these emerging business issues. “

Extending this effort, KT’s North America operations team is also forming a Customer Advisory Group. This group will consist of various clients they will work with to develop new products and services that meet today’s business needs. Alongside these measures, they also attend and present at various industry conferences throughout the world, sharing best practices and client successes. With the world becoming more globalized, Baldwin believes that social media has also become instrumental in achieving success. “Through social media platforms such as LinkedIn, we are in constant communication with user groups, industry groups and many others discussing and exchanging ideas regarding current business issues impacting a variety of industries. Hosting WebEx events also provides opportunities to discuss current business issues.” A key testament to KT’s financial success is that their North America business unit has increased its revenue by 36 percent over last year.

According to Baldwin, this growth is the result of a number of factors. Among these include greater involvement by senior leadership in business development, increased sales results from recently hired client relationship managers, greater account penetration with current clients, more effective lead generation activities and growth in certain industry
segments, particularly in operational and service excellence. “Alongside these measures, our operating profit has significantly improved as a result of several changes implemented over the past few years,” says Baldwin. “These include having a more variable compensation structure and work force, improved utilization of our consultants within their regions as well as across the company through a ‘global resource pool’ and a quarterly incentive system that rewards operating profit performance of our regions and the total company. Finally, the realization of the investments we have made in new hires and capability development of our consulting resources has added value to the projects and results we deliver our clients.”

Looking to the future, Baldwin remains optimistic that Kepner-Tregoe will continue to grow and is fully prepared to embrace any changes that come along the way. “Each year we challenge ourselves as we develop our strategic, operational and financial plans for the next three-year period. We look beyond growth in revenue, profitability and shareholder value each year to other goals and objectives. We want to continue to deliver sustainable, measurable results to our clients through our processes and help our clients build capability in our processes.

“In order to achieve this, we need to evaluate our resources, our markets and our products. We also need to ask ourselves who are we looking to hire, what capability development we provide, what product and service innovation we invest in, what markets are growing and what are emerging client needs. In evaluating these questions, it challenges us to ensure we continue to deliver results to our clients, continue to grow revenue, profitability and shareholder value and build an organization with highly capable, valued and engaged employees.”

Company: Kepner-Tregoe, Inc.
Name: William B. Baldwin
Email: [email protected]
Web Address:
Address: 116 Village Blvd., Suite 300, Princeton, NJ 08540
Telephone: 609-252-2558

Real Estate Fund Manager of the Year - USA – 2015
FundsReal Estate

Real Estate Fund Manager of the Year – USA – 2015

Generating wealth preservation, along with superior risk adjusted returns, is American’s strategy. American invests in Core, Core Plus, and Value Add apartment properties. American’s Senior Partners are experienced fiduciaries having owned and managed over $4.5 billion in apartment properties over the past 40 years.

Ann McSheehy, Senior Principal at American, says, “It’s about how well you did in keeping risk low and generating outsized returns, how well you did in improving people’s lives and neighbourhoods, how successful you  were in bringing solid alpha to co-investors, and, across all parts of the economic cycle. This is where we are differentiated, is in the quality of work that we do – we are stable and focused on wealth preservation, while we generate higher alpha for co-investors through our market expertise in deal sourcing and targeted renovations; we keep the investment stable across all economic cycles; and we make a huge positive impact on the lives of residents and neighborhoods – which allows us to bring great returns, even with an investment which has the risk profile of a bond.”

“For several generations, my family has owned and managed apartment properties, with a strong focus on strategic value add,” says Ms. McSheehy. “Through the generations, we have cleaned up and turned around neighbourhoods which were once threatening to fall to crime, but which are now leading communities in the U.S.”

Apartment Properties – the Gold Standard
Apartment properties are the gold standard of the investment world, performing well in every economic environment. McSheehy explains, “Once in a while over the years, people will ask me, are we in a bubble, and I explain to them that Apartment Properties (Multifamily) is the gold standard of an investment that performs well in every economic environment. Even in the worst or recessions or depressions, when traditional stocks and bonds perform poorly, and even private equity performs poorly, and even when just about all of the other asset classes in real estate perform badly, Apartment Properties do well.”

Over the past 30 years, investment in real estate has yielded a greater return than the S&P 500, the Dow Jones, the NASDAQ, or the Russell indices. Returns on private real estate investments in each of these periods, were higher than for publicly traded real estate, and had lower volatility, as measured by the National Council of Real Estate Investment Fiduciaries’ NCREIF National Property Index. (FTSE NAREIT U.S. Real Estate Index Returns, National Association of Real Estate Investment Trusts, S&P 500, Russell, Dow Jones, Nasdaq, FTSE NAREIT equity
REIT index.)

Why is that? “In a recession or a depression, companies do badly, stocks generally do badly and people lose huge percentages of their wealth in stocks and other investments as happens in every cycle; companies lay people off. Then, companies rent less office space and retail space, so those asset classes in real estate do terribly. And, far fewer numbers of people are able to afford a single family home, so those do terribly, too – they are not buying – they are renting. All of those buyers are forced to become renters – and so especially in the worst times, renter demand is robust and grows, and apartment properties perform well.” American’s principals have owned and managed apartment properties with consistent results throughout all market cycles.

Strong Tailwind Demographics
The ‘prime renting age’ in the U.S. is approximately 18-35 years old. Over the coming 10 years , the number of people “ageing out of” prime renting age is far smaller than the number of people “ageing into” this age. The net increase in individuals in prime renting age is set to increase from about 71 million people to about 86 million people. Additionally the U.S. Census projects that homeownership will decline 6-8% in the coming decade, leading to a 6.6-8.8 million new renter households.

Over the past decade, the construction of apartment properties declined. New construction is aimed primarily at the urban centres of large primary market cities, and nationally is projected to meet only a small fraction of new demand for apartments. This supply constraint creates strong fundamentals for the asset class, over and above its already strong fundamentals.

Wealth Preservation
“The investment world all agrees that apartment properties are the ultimate in Wealth Preservation,” says McSheehy. Insurance companies and other institutional investors price out the risk in apartment property investment, as having the risk of a bond. But the distinction is that, it also brings good returns. “Housing is a core human need, becoming even more of a need in bad economic times when people cannot buy and must rent.”

Triple Bottom Line – Virtue and Returns

American invests with an eye on a triple bottom line: adding value to the lives of residents; adding value the lives of individuals in the neighbourhood around the property; and adding value to co-investors. These three goals and objectives strengthen and reinforce each other, in a circle. “Neighborhoods are always in a state of change, a state of flux. Nothing in life ever stands still,” says McSheehy. “Neighborhoods are either improving or getting worse. A lot of other groups just suck cash out of properties, which essentially means that they are sucking cash out of neighborhoods, and when they do so, a large anchor property has a huge effect on making the neighborhood around it a much worse place to live.” American, in the Value Add work that it does, differentiates itself by investing capital to positively transform neighborhoods and properties, which results in jobs returning to the neighborhood, and far increased quality of life for the individuals living in these neighborhoods.

It also leads to higher returns for the co-investors who have invested in these Apartment Properties. McSheehy explains, “It is not Value Added by just buying at a low price or using unnecessary risk – rather, it is actual real, physical value which is added to the lives of residents and  to the neighbourhood. This is more work than other groups care to do. But it is how we are able to generate significant returns while maintaining the bond-like, Wealth Preservation risk profile of the investment.” “To put it in perspective: we do Core, Core Plus, and Value Add. This applies just to our active Value Add: for some of our work, we look for properties where we can turn the property around and turn the community around. Generally, we see properties that fall into disrepair, and some crime, and it obviously has a huge destabilizing effect on the entire neighbourhood around it. The ownership there had been sucking cash out of the property and not investing into the property. They haven’t been doing background or crime checks on their residents. They let in some bad apples. Then all the good people live in fear, which is most of the people. And the property looks bad as well. What we do for our Value Add, is, we buy properties like this, generally 100 apartments to about 500 apartments, and we clean them up. We put in place a top quality property management company. We put in a renovations budget, we clean up the property, we make it a beautiful place to live, a place where the residents are proud to live. “That is just one example, we do all types of value add.”

Significant Value Add Leadership in the Industry
American and American’s partners have consistently delivered IRRs above those of the industry. McSheehy explains that it is due to the far higher amount of time, focus, and hard work that the group puts into each property value add renovation. “This is something that other groups are not able to do, even if they wanted to do, which they don’t want to,” McSheehy says. “We spend months negotiating materials prices down. We pay far less than market prices for materials, whereas the rest of the industry pays about 120% of the market prices for materials in their renovations because of markups from contractors.”

American does not tie construction management fees to the cost of the renovation, as the rest of the industry does. “We are IRR driven, and when we invest with co-investors, we are compensated from the IRRs and from our portion of the good returns results for co-investors. This is a clear and transparent alignment of interest which is lacking in the rest of the industry. Our construction management fees are minimal and cover part of the staff cost for that renovation, and are not tied to renovation cost, but to how much we are actually able to increase returns for co-investors, and we don’t get paid anything significant until after the investor has received very good returns.”

Ms. McSheehy explains how renovations influence the IRR of a property. “When you run a sensitivity analysis, you see that some things do not affect the IRRs very much – actually most things don’t. However, the things that affect the IRRs substantially are, first, the amount spent on that renovation and how far those dollars go – the selection of where those dollars go, and second and most importantly, the rents that residents pay after the renovation.”

Throughout the rest of the industry, the real estate group is paid 5% of whatever they spend on a renovation, which is a direct conflict of interest with their investors. “No one will go out and spend an extra 200 hours searching for better or cheaper or higher quality materials for a renovation, or more innovative ways to make a property really beautiful and
‘breathtaking’ for prospective residents, when they are just getting paid more if they spend more,” McSheehy explains. “Even for the groups that would do so, they are directly incentivized to do the exact opposite.  “We operate from a completely different paradigm”

Typically, when a real estate group does value add, says McSheehy, “they call and say, ‘Joe, bring in the new cabinets and the sand colored carpets,’ and make a phone call to a designer if necessary for a common area. They get tiny rent increases and they call it a success, and say they are a huge success because they have done a huge volume of apartments – with no quality or high results whatsoever, for the co-investors. Or the residents. We have never had a value add renovation like that – we expect to see higher rent increases which translates directly to IRR, and we do beautiful renovations which we put huge amounts of time into. We do everything so differently. We operate from a completely different paradigm. It comes down to diligence and very hard work. There are no shortcuts.”

High IRRs and High Rents – Driven by a Deep Understanding of Human Perception 

Matt Williamson, Senior Principal with American, says, “It also comes down to the fact that we have a significant advantage, and that is the deep lifetime of renovation experience of Ms. McSheehy. The entire industry is run by men, who have a significant disadvantage when it comes to design.”

Ms. McSheehy is unique, in that she is a Senior Principal and she also leads the Value Add strategies and details. “She leads from the front, like Alexander the Great, not from a phone call from afar once a year.

The difference in the product and in the Alpha is immense,” he explains. She has studied at the number one ranking best universities and graduate schools around the world, Oxford, Georgetown, London Business School, Sorbonne, she has done Private Equity around the world and in the U.S., and she is also a cultural and style genius, the likes of which have never been seen in the U.S., Europe, London, or the rest of the world. “I remember the story about how, when she was young in the previous generation of the business, she wanted to prove a point. There was an apartment property in the Chicago area that her family had renovated and already exceeded expectations on rent increases following a renovation a few years before. She made a few inexpensive changes and increased rents by the same amount again, as they had done in the original renovation – which had already exceeded expectations. She has always had this tremendous ‘feel’ for what makes renters want to live in a place, and love to live in a place. It is far more and far different than a design perspective; it is a unique understanding of human perception and feeling and what people visually and emotionally want in a home.”

Bringing Value to Individuals
The higher returns American has, compared to its industry peers, are because “we give residents the opportunity to live in an apartment of a far higher quality than they can get in other apartment properties in the area. “In a way, it fulfils one of the important dreams of people’s lives. We are giving the opportunity to a large number of people, to live in high quality homes that they are proud of. Even if they will one day buy a home, it will never have as high of a design quality as the apartment product that we offer.”

Robust Pipeline
Able to source the most attractive deals, both on and off market, the company maintains a robust network of relationships throughout the industry, allowing it to have a strong pipeline of deals. “We typically bid on about 2% to 4% of the deals that we see,” says McSheehy. “This allows us to maintain a very high quality of product. We are focusing on key geographic locations which are outperforming in our key metrics. Over the past 40 years, these criteria have been extremely successful at winnowing out which markets will provide robust support for outsized returns relative to the very low risk of apartment properties.”

“Rocking Chair Test”
McSheehy says that the culture of American is different because it focuses on Triple Bottom Line and purpose. “As a company, we say, ‘this is our Purpose,’ ‘this is our mission, this is our impact on the world, and this is what no one else can do the way we can,’ and every day lead every day with that purpose.

“Does your work pass the ‘rocking chair’ test? Does your work pass the ‘deathbed’ test? Is what you are doing having a positive impact on peoples’ lives? This is what I believe is one of my missions in life, it is work that I have been trained in doing my entire life. Within the apartment property asset class, we do great Core and Core Plus, and Value Add, and for me, really, with all of the asset classes, and especially regarding the Value Add, it is tremendous to see the effects of our work in cleaning up entire neighborhoods, making them far safer places to live, far more beautiful places to live, places for jobs to return to, neighborhoods that flourish, and the lives of families and individuals are able to flourish. This creates actual physical Value for people in their lives, brings stable returns and stable alpha for our co-investors throughout every economic cycle, thus helping their lives, and doing our part to contributing to making our economy a more stable and healthy one.”