Wealth & Finance International - Fund Awards 2015

www.wealthandfinance-intl.com 5 Deutsche Finance Group is one of the most active private market investors for indirect real estate and infrastructure in- vestments in Europe. It is a highly focused investment company managing indirect institutional private equity real estate and infrastructure portfolios on a global basis. With a personal investment experience in the institutional indirect market space of more than one decade and investments of more than 4 bln USD in about 200 Limited Partnerships in Europe, North and South America and the Asia Pacific region the investment team of Deutsche Finance is one of the most ex- perienced teams in the international fund selection and co-investment arena. They focus on entrepreneurial managers with a high dedication to create value and being fully aligned with their investors. We spoke to Symon Godl, Managing Partner at Deutsche Finance Group, to find out more. Whenever we pitch for a prospective new client or mandate, one of the first sentences we hear is: “Fund of funds are expensive, illiquid, not transparent, not focused and for that reason somewhat more risky than other ways to invest in alternative investments like private equity real estate and infrastructure.” This is always a great start of a discussion because it is the perfect invi- tation for us to talk about the great benefits of indirect investing and fund of funds and talk about the different experience we provide after being active for more than one decade in this market sector. I can tell you, fund of funds investments can actually be cheaper, less risky and much more transparent than any other way of investing in pri- vate equity real estate and infrastructure and as a result the risk adjusted performance of these investments can be much higher. But even import- ant is that fund of funds can add much more benefits for the investors. Deutsche Finance Group When the partners of Deutsche Finance Group started their business 10 years ago, their vision was to establish an investment company offering products for private clients and institutional clients different to the existing competitors. But the target was not only to be different, it was to be much more diversified, long term oriented, actively managed, more transparent and to deliver higher performance based on risk adjusted returns. Today, 10 years later, Deutsche Finance Group manages 10 indirect investment vehicles for private individuals and institutional investors. With assets under management of roughly 400 mln USD of equity and a personal investment track record of more than 4 bln USD and nearly 200 indirect investment strategies in more than 30 countries globally, Deutsche Finance is one of the most active European private market investors and most experienced teams in the international fund selection and co-investment arena. The focus of all investment strategies is on indirect private equity real estate and infrastructure investments with entrepreneurial local managers and a high dedication to create value and being fully aligned with investors. Every day we are convinced that fund of funds, managed the right way, can offer great benefits compared to direct investments in a market. The core investment team of Deutsche Finance Group earned broad experience in indirect investments in private real estate and infrastruc- ture working for well-known pension funds, insurance groups and asset management firms in the past. Deutsche Finance Group is an integrated investment company with more than 50 people working every day for the success of our clients. Being regulated with a licensed investment manager and a licensed distribution company and having all important resources in-house, Deut- sche Finance is able to maintain the full lifecycle of a product from the beginning until the liquidation of a fund. Deutsche Finance is supervised by German Financial Markets Supervisory Authority (BaFin) and German Federal Reserve Bank (Deutsche Bundesbank). We service the needs of private clients with highly focused fund of funds, family offices, professional investors and institutional investors with co-investments and individual solutions. Our fields of competencies are real estate and infrastructure, investment strategy, fund of funds, segregated accounts, fund selection, emerging managers, mature and emerging markets, value add and opportunistic investments, develop- ment and distress strategies. The Benefits of Fund of Funds/indirect investments The potential benefits of funds of funds for real assets are always debat- ed in the asset management industry. How can a fund of funds manager justify the additional fees on a second investment level? Can he argue that funds of funds deliver excess returns? We always argue that fund of funds investors may indeed benefit from attractive risk-adjusted returns: firstly, because diversification does reduce volatility; and secondly, be- cause diversification may even increase returns. But additionally, funds of funds managers that want to justify their services going forward will have to add value beyond the premier fund selection and diversification. We always explain that investors can benefit from a different asset management approach, combining the traditional benefits of a fund of funds, with additional support. By assessing the relative attractiveness of different private equity real estate and infrastructure strategies and in- struments, funds of funds managers can considerably improve efficiency and returns to their investors and funds. Discussions about the attractiveness of fund of funds often focus on the double layer of fees charged by fund of funds. And for many investing institutions, that’s reason enough to eschew the fund of funds model in favour of investing directly in a selection of private equity real estate funds. But a comparison of management fees alone is not the whole story. Instead, a sound decision about which approach to use should rely on a close look at all the factors that contribute to the overall value. Investment Performance as the largest contributor to investor benefit is unknowable in advance, but other benefits of a fund of funds model may be more easily identifiable. They include the following: Professional Research and Due Diligence – Investing in private equity real estate and infrastructure funds can be a very complex strategy, especially making due diligence a critical part of the process. With a