Alternative Investment Awards 2014

Presented by

Wealth

& i

Best Middle-Market Institutional Investment Manager, USA & Best Performing Absolute Return Fund Since Inception:

“Brevet believes that to do the right thing over earning an extra basis point of return is what sets apart the long term winners from the short term earners�

Douglas Monticciolo, CEO, Brevet Capital

Overall Absolute Return Strategy Advisor of the Year:

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Stability & Flexibility

Reinsurance that stands above the rest

In a competitive environment, we recognise the need for continuous improvement to meet changing demands.

BERMUDA / LONDON / SINGAPORE W W W. H AV E R F O R D B E R M U DA . C O M

HAVERFORD

welcome By their very nature, alternative investments are a breed apart.

Often governed by their own set of rules and practices, they rarely conform to industry standards – and so it is with many of those individuals and businesses who work in the sector.

The 2014 Alternative Investment Awards celebrate some of the leading lights making a big difference in one of the most exciting, unpredictable and fast moving sectors in the global business world. From the firms whose ability to think differently is changing the very way in which we invest to the businesses and individuals driving compliance and shaping the regulations that affect the wider investment industry, we are paying tribute to them all.

As part of these prestigious awards, some of the biggest and most influential names on the financial landscape stand shoulder to shoulder with smaller – albeit no less influential or ground breaking – organisations and shine a spotlight on some of the most forward-thinking work done anywhere in the world over the past 12 months.

So, let’s find out who has been at very forefront of the Alternative Investment pack this year, and hear from some of the most respected voices in their respective industries.

Mark Toon, Editor, Wealth & Finance mark.toon@ai-globalmedia.com

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Best Middle-Market Institutional Investment Manager, USA & Best Performing Absolute Return Fund Since Inception Brevet Capital

four

Best UK Asset Manager - Infrastructure & Most Innovative Alternative Investments Team of the Year, UK Aberdeen Asset Management

eight

Best Performing Asian Focused Fund Ventech China

Best Global Hedge Fund Operational Due Diligence Firm Castle Hall Alternatives

thirty

Property Investing: The Great Global Diversification It’s no secret that UK property prices have exploded in the last year

thirtytwo

Best in Secondary Investments, USA Second Alpha

thirtyfour

Best Value Added Real Estate Fund, UK UBS Central London Office Value Added Fund (UBS-CLOVA)

thirtyeight

Best Asset Managers, USA & Best Fund of Funds Investments Team – USA Northern Trust Asset Management

thirtynine

ten

Best AIFMD Law Firm, Europe Matheson

eleven

Global Award for Excellence Investing in Special Situations & Best Emerging Market Focused Private Investment Firm, North America AIP

twelve

Best Illinois-Based Investment Managers & Best Volatility Arbitrage CTA Fund - USA (GalNet Alpha Fund, LLC) GalNet Asset Management

thirteen

Best AIFMD Fund Platform, Luxembourg Maitland

fourteen

Best in Client Service for Hedge Funds under $30 billion Maitland

fifteen

Best in Managed Futures - North America & Best Performing Early Stage FoHF - USA (Steben Select Multi-Strategy Fund) Steben & Company

sixteen

Alternative Investment Assurance & Advisory Firm of the Year EY Luxembourg

twenty

Giving Something Back There’s much more to alternative investments than property and fine art

twentytwo

Best Outsourced AIFM Solutions Provider & Asset Valuer of the Year, Europe Value & Risk

twentyfour

Best North American Hedge Fund Administrator, Best Mutual Fund Administrator, USA & Best North American Alternative Investments Administrator UMB Fund Services

twentysix

Best for Multi-Strategy Portfolios, North America Matrix Capital Advisors

twentyeight

Best Family Office Investor, UK icf management limited

forty

Boutique Asset Manager of the Year - New York & Best New Fund - USA (SECOR Alpha Fund) SECOR Asset Management

fortytwo

Most Trusted Private Investment Office of the Year, UK & Best CEO of a Private Investment Office, UK (Steve Rubens) Ruby Capital Partners

fortythree

Alternatives Fund Solutions Team of the Year, UK & Best Alternative Investment Fund Manager, UK Deutsche Asset & Wealth Management

fortyfour

Overall Absolute Return Strategy Advisor of the Year AppleTree Capital

fortysix

Software Product of the Year LexiFi

fifty

Transforming Fine Wine Investing More and more wine connoisseurs are now realising the true value of their collections

fiftytwo

Best Boutique Investment Management Firm, UK & Best UK Equity Market Neutral Fund - Sabre Style Arbitrage Fund Sabre Fund Management

fiftyfour

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Best Middle-Market Institutional Investment Manager, USA & Best Performing Absolute Return Fund Since Inception (Brevet Capital Special Opportunities Fund III, LP)

Brevet Capital Management With a proven industry position, Brevet Capital has shown unrivalled performance over the past 12 months in both bull and bear market conditions. Brevet’s CEO, Douglas Monticciolo spoke to Wealth & Finance about the firm’s continuing success

T

ell us about Brevet Capital Management, your clients and the services you offer.

Are there any specific alternative investments that you specialise in?

Brevet Capital Management and its affiliates was founded in 1998 and is headquartered in New York. The firm specialises in making senior secured loans that provide growth or bridge financing to middle market, private companies. Brevet’s senior management has worked together for over 19 years as members of proprietary investment groups at Goldman Sachs, as well as Deutsche Bank, Lehman Brothers and other leading firms.

Brevet offers investment opportunities in the private credit, direct lending industry through hedge fund, managed account and separate account structures. Brevet focuses on uniquely structured, middle market financing for companies with strong collateral in sectors that include government subsidised programs, business and professional services, software and technology, education and training, art finance, and renewable/ alternative energy products and services. Brevet Capital Special Opportunities Fund III, L.P. (Fund III) targets high current income, short liquidity duration (generally less than 12 months, with an asset level maximum of 18 months) investments that are expected to exhibit low correlation to the general economy, capital markets, and other financial assets.

Brevet has a diversity of clients ranging from large institutions to small family offices, as the benefits

of Brevet’s cash generating strategy appeal to a wide variety of clients. On a capital invested basis, institutional investors make up the largest percentage of Brevet’s investor base, followed by fund of funds, high net worth investors, family offices, pensions, and ending with private banks.

How does working in alternative investments differ from the more conventional sectors? Are there any specific things you need to take into consideration and how much more difficult is it to keep your finger on the pulse?

The greatest differentiator of working in the alternative investments space over more conventional sectors is the loss of a traditional, established, liquid market. To operate in the alternative investments space, Brevet must directly source, structure and administer all of its loans from origination to realisation. Unlike its competitors, Brevet does not rely on brokers or syndicates to source transactions.

Instead, Brevet has a dedicated sourcing team who are responsible for researching and developing sectors that offer Brevet’s target characteristics for potential borrowers. Brevet then contacts potential counterparties directly and establishes exclusivity. The direct targeting, coupled with this exclusivity affords Brevet the ability to structure the strongest deal possible, without having to compromise on rate or terms to attempt to “win” a transaction. This results in Brevet achieving higher rates and terms on its transactions than traditional market players.

What major successes can you point to over the past 12 months that have seen your business stand out among your peers?

Brevet’s proprietary sourcing has always been, and continues to be the major differentiator between our competitors. Brevet sources product directly, through more than 15 years of relationships, direct targeting and ongoing research and development. By avoiding brokers and syndicates, and requiring exclusivity on all transactions, Brevet is able to structure more secure transactions, without having to give up return or covenants to attempt to “win” a transaction.

Additionally, Brevet’s merchant banking approach of providing borrowers with not only capital, but also advice and expertise, ensures stronger counterparties and stronger deals. Brevet works with its counterparties, even after the loan closes through improvement covenants, to maximise the borrower’s effectiveness and efficiency not only as a company, but also as a client. This is distinctly unique from Brevet’s competitors, as most credit funds deploy capital and either sell off parts or all of the loan, or immediately turn their attention to the next origination. Brevet’s continual focus on its borrowers ensure stronger, more stable returns.

What plans does your business have in place to ensure it remains at the forefront of the sector for the coming year?

Brevet is always researching and developing new

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sectors and products to ensure it has a growing pipeline and stays one step ahead of the competition. For example, Brevet spent 18 months researching the Affordable Care Act and has found a niche sector within the healthcare space that offers investors 16%+ collateralised returns.

It is this constant search and creation of alpha that not only eliminates beta, but that also allows Brevet to earn such high yields in a low rate environment.

Additionally, Brevet launched a joint venture with Madeira Global, LLC (MG) in April 2014 to create a social impact investing product. MG is an investment and advisory firm focused on impact investing for qualified investors and institutions.

Social impact investing is an investment approach that aims to generate both financial return and measurable, positive social or environmental change.

In response to a growing demand for a more liquid, accessible impact investment product, Brevet and Madeira Global Capital Management (MGCM), MG’s asset management unit, have launched a new Fund III share class offering in April 2014: the I-Class. The I-Class seeks consistent, market-rate returns through short-duration, collateralised loans to middle market companies focused in six key social and environmental impact areas: education, health services, infrastructure development, financial services, renewable energy and sustainable agriculture.

Brevet will not be seeking out social impact investments. Instead, Brevet will continue to target, source, structure and close transactions with the same rigour it always has; however, given Brevet’s win-win approach, and the adventitious social benefit of the sectors Brevet targets, MGCM will be assessing the transactions (post-closing) to determine if they qualify as impactful. This ensures that Brevet does not change any portion of its investment process as a result of this joint venture; however, it does allow Brevet the opportunity to access a new segment of the investor market.

What was your reaction to being named Best Middle-Market Institutional Investment Manager and Best Performing Absolute Return Fund since Inception?

Brevet was excited to learn that it had won Best Middle-Market Institutional Investment Manager and Best Performing Absolute Return Fund since Inception. It is an honour to see an industry-leading publication like Wealth & Finance recognise a firm like Brevet. It seems that the industry, and thus the industry publications, often follow the larger, more-publicised firms, leaving the smaller

niche players unnoticed. Brevet was pleased to have such a well-established, well-respected publication take notice of its efforts.

What areas have you focused on and what challenges have you overcome to win the award?

The greatest challenge for Brevet, especially with regards to Best Performing Absolute Return Fund since Inception, was cash drag. To manage a short duration fund, with short term, cash generating assets, takes a vigorous cash management system. As Brevet’s track record shows, in the first few years of Fund III’s life, the returns were in the 7%-8% range, despite gross yields averaging 15%. The influx of new investors, coupled with an early pay down of a loan, made cash management difficult, and strongly impacted returns.

Brevet responded by implementing a six-month callable structure to better manage incoming capital from investors. This callable capital structure reduced cash drag substantially in 2013, increasing Brevet’s net return to almost 9% for the year; however, cash drag was still negatively impacting returns, so in January 2014, Brevet obtained a line of credit to improve cash management and to further reduce cash drag. The line of credit is currently a US$15m facility, with a maximum LTV against the Fund’s assets of 25%. In the first six months since the inception of the facility, the line of credit has resulted in an average monthly net return of 0.9% for Fund III in the first half of 2014. (Assuming a continued monthly net return of 0.9% equates to an annualized net return of 11.4%. Please note that past performance is not indicative of future performance). Overcoming the challenge of cash drag certainly contributed to our increased per¬formance, and resulting acknowledgement.

The second challenge that Brevet had to overcome was scalability. When the Fund first launched, Brevet was sourcing smaller, more opportunistic transactions that were not optimal for large, scalable growth. As the Fund has grown, so too has Brevet’s ability to target larger deal sizes without changing strategy, and simultaneously expanding its target sectors. This has allowed Brevet to develop product lines within target sectors that allow for repeatability and scalability. This has allowed Brevet to grow the Fund at a rapid pace while still achieving target returns. Moving from opportunistic-based credits to more scalable product lines was been a major contributor to Brevet achieving such high returns, and ultimately winning this award.

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Brevet’s number one philosophy when it comes to clients is transparency.

Information is key, and Brevet prides itself on complete transparency. Everything is available to our clients

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Tell us about Brevet’s overriding philosophy when it comes to your clients.

Brevet’s number one philosophy when it comes to clients is transparency. Information is key, and Brevet prides itself on complete transparency.

Everything is available to our clients. The second most important philosophy is constant communication. Knowledge is power, and Brevet believes it is important to keep investors informed. The more frequently Brevet communicates with its investors, the stronger the relationships become and the more informed investors remain. This ensures no investor is caught off guard and that they are fully knowledgeable on what they are invested in. Lastly, cash is king, and Brevet’s quarterly cash distributions are a major attraction to investors. By continuing to provide investments that generate high volumes of cash, and distributing that cash on a quarterly basis, investors remain pleased with the services they are being provided.

What should clients be looking for when seeking a capital management firm?

Brevet believes that transparency and integrity are the two most important things when investing with a capital management firm. It is important that investors are able to see and review the processes and procedures that lead a firm to make investment decisions. It is also critical that investors have access to the files, folders and performance of those investments that their capital has been deployed in. Secondly, but no less important, integrity is vital to being a successful investment manager. Brevet believes that to do the right thing over earning an extra basis point of return is what sets apart the long term winners, from the short term earners.

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What sets Brevet Capital Management apart from your competitors and peers and how do you use this differentiation to your advantage?

What developments or changes do you see having the biggest impact on your business and industry over the coming year?

Fund III has five key competitive advantages: a seasoned team, with over 25 years of experience in this market segment; a strategy providing high barriers to entry to Brevet’s target market; direct sourcing, which allows investors access to transactions that have not been in a competitive process, and producing above market returns; customised structures that ensure borrower alignment, and provide extra downside protection; and high cash flow that allows for quarterly cash distribution to investors.

The largest opportunity for Brevet is the lack of recovery from the banking industry post the financial crisis of 2008. Brevet has been in the private, direct lending space for more than 15 years and has thrived in a multitude of economic environments; however, the recent changes and regulations in the banking industry have afforded Brevet even more opportunities than ever before.

Brevet has filled the void left by the regional and community banks, which have drastically reduced and restricted their middle market lending capabilities. Brevet does not see the local community and regional banks re-entering the market any time soon. This creates a vast opportunity for loan origination for Brevet. Brevet must focus on market positioning in the coming months to ensure that it does not get grouped with other direct lenders who are playing in the more commoditised, sponsored-back and syndicated bank loan market. Brevet must continue to educate institutional investors and differentiate itself from correlated direct lenders.

Furthermore, by sourcing directly and operating below the large, syndicated debt market, Brevet is able to reduce beta, and increase alpha. Many of Brevet’s competitors are focused on US$150m+ deal sizes, placing them in the commoditised, correlated CLO and syndicated bank loan markets. Brevet’s direct sourcing, coupled with its philosophy to be the sole manager of the loan from origination to repayment, affords Brevet and its investors a less correlated return that does not rely on a secondary market for repayment. Unlike many competitors in the direct lending space, Brevet is a senior secured, collateralised lender, ensuring that even in a troubled environment, recoveries will be higher.

In the past year, Brevet has seen a drastic increase in the demand for two to four year financing from the companies Brevet targets for Fund III (Brevet’s shorter duration strategy). In response to this increase in demand, Brevet plans on launching

the Intermediate Duration Fund (Int. Dur. Fund) in the fall of 2014. Both funds (Fund III and Int. Dur. Fund) will target the same sectors, industries and senior secured, collateralised structures. The only differentiator will be the average collateral liquidity. The short duration fund (Fund III) will continue to target an average liquidity duration of 12 months and less with gross returns averaging 15% before upside participations. The Int. Dur. Fund will seek to make two to four year loans that target 16%-18+% gross returns, before upside participations. The Int. Dur. Fund will provide Brevet’s investors with the same unique investment strategy, but with an even higher liquidity premium.

Contact name: Casey Miles Website: www.brevetcapital.com Tel: +1 (212) 974 5777 Address: 230 Park Avenue, Suite 1525, New York, NY 10169, USA

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Best UK Asset Manager - Infrastructure & Most Innovative Alternative Investments Team of the Year, UK

Aberdeen Asset Management Aberdeen Asset Management, a double winner in our Alternative Investment Awards, delivers solutions to clients of all sizes, complexities and types. Andrew McCaffrey, Global Head of Hedge Funds, outlined for us what different approaches can bring to an investor’s portfolio

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At Aberdeen, alternatives are an important and growing part of our business, with over £11bn under management as of 31 March 2014.

Traditional asset classes such as equities and bonds have been under more and more scrutiny from investors of late. Although the global economy is growing and equity volatility is low, many investors are concerned about the outlook for developed stock markets. On the other hand, government and investment grade bonds continue to carry high valuations in a low rate environment that is driven by ongoing central bank intervention.

In fact, in recent quarters we have seen the correlation of returns between government bonds and equities turn increasingly positive leading to some anxious moments when both fall at the same time.

Investors appear to be stuck between a rock and a hard place. As a result, investors seek “alternatives” to these traditional allocations in search of diversification and sources of returns that are not directly linked to the direction of equity or bond markets.

So, what do we mean when we say alternative investments? The term is typically used to describe any asset class that is not equities, fixed income or cash. Historically, hedge funds, private equity, property and infrastructure have been considered as alternative investments and set as a separate asset class from equities and bonds. We would argue that “alternatives” is not an asset class at all, and neither are sub-categories such as hedge funds or private equity.

Let’s take a quick look at these investment approaches and what they can bring to an investor’s portfolio.

Hedge funds are probably the most well-known, but most misunderstood, forms of alternative investment. The term hedge fund represents a wide range of different strategies that invest in traditional asset classes, but in a non-traditional way. The types of risk/return profile available from hedge funds vary greatly. For example, there are strategies, such as long/short equity and event driven equity, that carry exposure to similar return sources as found in equity markets. Other approaches, such as global macro and relative value strategies, can be uncorrelated to traditional

markets and provide the opportunity for significant diversification of risk away from traditional markets. To get the most out of a hedge fund allocation, investors, or their advisers and managers, need a deep understanding of the characteristics that a particular investment will bring to an overall portfolio. This could be increasing or reducing overall risk, through styles that either act as substitutes for existing risk exposures, or diversifiers away from them.

sion of essential services; and potential value enhancement through active asset management.

Private equity ultimately provides exposure to equity investments. Recent studies support the view that there has been a measurable ‘illiquidity premium’ of circa 2% - 3% per annum above listed equities. How is this achievable? The longer term approach and type of target investment can create quite different returns drivers compared to public market investing, such as: being very early in the company’s growth; financial restructuring; and driving operational improvement.

The risks associated with such investments? Alternative investments are often more illiquid than investments in public markets and can be more expensive to buy and sell than traditional asset classes. This means that they should only be considered as a longer-term investment from a part of the portfolio that will not be required for shorter-term liquidity management. However, the upside of this illiquidity risk is the potential to enhance returns, diversify risk and lower the overall volatility of a traditional portfolio. Non-investment risks can also be apparent with some alternative investments. Appropriate, independent operational due diligence is key to making the right decisions about where to deploy your alternatives allocation.

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Although the global economy is growing and equity volatility is low, many investors are concerned about the outlook for developed stock markets

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berdeen is delighted to have won two Wealth & Finance International awards: Most Innovative Alternatives Team of the year and Best UK Infrastructure Team, UK.

A unique feature of infrastructure investment is that the scale at which the underlying projects can be sourced is dependent on government procurement plans creating the opportunity in the targeted geographies. This in turn means there are often capacity limitations. However, the current uncertain economic and market conditions highlight the benefits that such investment can bring to an investor’s portfolio. Investment in Infrastructure offers the potential for attractive risk-adjusted returns with: reliable inflation-linked returns; stable long-term yields, potential for capital growth; defensive characteristics emanating from the provi-

However, for the less liquid investments, such as the private equity and infrastructure allocations, there a broader considerations: volatility, correlations, beta cannot be measured and compared in the same way when the assets are held via an illiquid framework with idiosyncrasies around cash flows, valuation and return methodologies.

At Aberdeen, we have a sole focus on asset management and providing a range of investment capability and asset management services to our clients. We are long-term oriented in thinking, very focused on our own fundamental research and our proprietary due diligence processes – whether an equity that we are buying or a hedge fund manager we are allocating to – and it is important to understand the management of the company, have confidence in their approach and develop a strong, professional relationship. Only then can we build conviction in their ability to perform in line with expectation and make money for our clients.

Name: Andrew McCaffrey Email: andrew.mcaffrey@aberdeen-asset.com Website: www.aberdeen-asset.com Tel: +44 (0) 1224 631999 Address: Aberdeen Asset Management, 10 Queens Terrace, Aberdeen AB10 1YG

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Best Performing Asian Focused Fund

Ventech China Ventech China’s sustained results in early growth capital focused on innovation in China have led to success for the firm in this year’s Alternative Investment Awards Ventech focuses on early stage and growth companies, with a mission to “invest in leading and innovative companies, and through our nourishment become the industry leaders”.

Since inception, Ventech China has raised two US$ funds. The team is a fusion of affluent European processes, immersed local experience and entrepreneurial background. Ventech China is a visionary in market trends and emphasises commercial innovation, respecting entrepreneurship and its values while at the same time providing portfolio companies with the corresponding resources and experiences.

Ventech China’s portfolio includes Easou, Viva, Shenzhoufu, Jumei, Secoo, Umanto, Byecity, 51Wan, 9Yu, Wise Media and Walk’in.

According to Preqin, an international PE market research firm, in its ‘2013 Consistent Performers in Private Equity Report’, which covered over 6,300 funds, Ventech China ranks No.3 in ‘Top 10 Best Performing Asian-Focused Funds (Vintage 2006-2010)’ and No.10 in ‘Global Top 10 Best Performing Venture Capital Funds (Vintage 20062010)’.

Name: Evelyn Zhang Email: contacts@ventechchina.com Website: www.ventechchina.com Tel: +86 10 8517 2122 Address: 2104-05 Yintai Office Tower, Beijing Yintai Centre, 2 Jianguomenwai St, Chaoyang District, Beijing 100022, China

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Best AIFMD Law Firm, Europe

Matheson The number one funds practice in Ireland, Matheson’s market-leading expertise on AIFMD has seen the firm honoured in this year’s Alternative Investment Awards. Partners Dualta Counihan and Michael Jackson told us more about how the firm is excelling in this challenging field The Asset Management and Investment Funds Group at Matheson is the number one ranked funds legal practice in Ireland, acting for 27% of Irish-domiciled investment funds by assets under management as at June 2013. This dedicated funds practice is led by 10 partners and comprises over 50 fund professionals in total.

The team has advised on the world’s first AIFM authorisation and the first inward AIFMD management passport into Ireland. Its practitioners are experts in alternative investment funds including AIFs investing in pharmaceutical royalties, life settlements, property, currencies, commodities, bank loans, private equity, other hedge funds and on all hedge fund strategies including long/short, event driven, arbitrage, global macro, distressed debt and multi-strategy amongst others.

Partner Dualta Counihan notes, “Most managers have spent the last 12 months implementing an AIFMD compliance action plan for their funds. As these plans are now being completed, we expect to see significant focus on new product, which will inevitably tend to be onshore to avail of the AIFMD passports that are now available”. The funds team at Matheson also specialises in all aspects of UCITS including UCITS pursuing alternative or hedge fund strategies. Counihan notes that, “We also expect the trend of the last year or more of launching alternative strategies within UCITS to continue.”

A strong and recurring feature of this team as a group of practitioners is that they do not merely react to regulatory developments, but instead

proactively engage with regulators and government. In an exciting new development for the European alternative investment fund and UCITS landscape, the partners in Matheson’s Asset Management and Investment Funds Group have been to the fore in recommending and assisting in the development and implementation of the Irish Collective Asset-management Vehicle (ICAV), a new Irish fund vehicle.

Partner Michael Jackson notes, “The ICAV is specifically conceived as a bespoke funds vehicle designed to deliver operational and cost efficiencies for managers and investors. It is expected that the ICAV will become the investment funds vehicle of

choice both for AIFs and UCITS in Europe, due to a number of beneficial and streamlined features, in addition to the ability to elect its classification under the US check-the-box taxation rules”. Irish legislation to enable the creation of ICAVs is expected to be enacted by the third quarter 2014.

As one of the most active and experienced funds practices in the market, and a leader for complex funds mandates, partner Tara Doyle observes that, “What ultimately sets Matheson apart from other European law firms practising asset management law is our people. We have unparalleled strength in depth and a client focussed structure; our lawyers don’t work for our partners, they work for our clients. Specifically in an AIFMD context, our partner-led know-how team ensures that our lawyers stay on top of, and are in a position to influence, all relevant legal developments.”

Name: Tara Doyle Email: tara.doyle@matheson.com Matheson partners pictured from left: Shay Lydon, Joe Beashel, Michael Jackson, Elizabeth Grace, Tara Doyle, Liam Collins, Dualta Counihan, Aiden Kelly, Anne-Marie Bohan and Philip Lovegrove.

Website: www.matheson.com Tel: +44 20 7614 5688 Address: 16th Floor, 110 Bishopsgate, London EC2N 4AY

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Global Award for Excellence Investing in Special Situations & Best Emerging Market Focused Private Investment Firm, North America

AIP We caught up with Jay Bala, Portfolio Manager at AIP, to find out how the firm is leading the pack in special situation investing

Working in alternative investments differs from the more conventional sectors and Jay Bala CFA, Portfolio Manager, describes how much more difficult is it to keep your finger on the pulse.

“Alternative investments’ performance has low correlation with those of conventional sectors and call for extensive due diligence prior deployment of capital. In contrast to blue chips, alternative investments tend to be less liquid and require proactive monitoring and hands-on portfolio management. If all is executed correctly, this generates high alpha.

“Alternative investments help to diversify the overall portfolio and increase risk adjusted returns. However, they are usually less liquid and have longer time horizon.”

Over the past 12 months AIP funds have consistently generated a two-year CAGR of about 38% and over-performed the markets and majority of

peers, a factor which contributed to the firm winning the Global Award for Excellence Investing in Special Situations and the Best Emerging Market Focused Private Investment Firm. Bala comments: “Glad to see AIP’s success is recognised globally. Moreover, these awards coincide with AIP’s nomination for the Ernst & Young Entrepreneur of the Year Award in 2014. AIP owes this success to its team. Awards such as this help to generate healthy competition and motivate industry professionals to work harder for their clients.”

Finally, Bala tells us about AIP’s overriding philosophy when it comes to clients, explaining what he believes to be vital areas to focus on when it comes to providing the best possible service.

“AIP’s overriding philosophy is to keep clients happy and engaged. In order to provide the best possible service, AIP puts clients’ interest first and focuses on exceeding the clients’ expectations.

“Clients shall expect the best services, risk-adjusted returns, consistent and professional approach. AIP uses well-known services providers and auditors to mitigate the risk of being a private firm to their clients.

“We are set apart from our peers due to our exemplary performance, consistency, professionalism and innovative fee structure.”

Name: Jay Bala Email: info@ aipassetmanagement.com Website: www.aipassetmanagement.com Tel: +1 416 601 0808 Address: TD North Tower, 77 King St West, Suite 4140, Toronto, ON, M5K 1E7, Canada

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Best Illinois-Based Investment Managers & Best Volatility Arbitrage CTA Fund - USA (GalNet Alpha Fund, LLC)

GalNet Asset Management GalNet’s strong performance in both bull and bear markets has brought the firm success in this year’s Alternative Investment Awards Barry Netzky, Co-Founder at GalNet Asset Man¬agement, says alternative investments typically need to have very competitive performance or an attractive structure like a favorable tax structure.

to continue to be recognized,” says Netzky. And, although the firm has recently won a few other accolades, he says, “This one is special, as Illinois is home to some of the best option trading groups in the world.”

“Open communication with the principals, alignment of interest with the management teams personal investment, tax efficiency, and 10 years of positive returns are just a few ways that helps us to differentiate ourselves from our peers.”

“That gives the potential client a definitive reason to allocate to an alternative versus the more conventional sector,” he says.

Awards like this are very important, Netzky says, because they give managers a sense of the indus¬try’s perception of the firm. The award represents a culmination of GalNet’s constant focus on evolving its risk management systems, as well as its ability to internally understand the changing dynamics in volatility.

The industry is changing, says Netzky. And this presents both challenges and opportunities.

“The last three years have not been the best for some volatility managers, as ‘vol’ has been at historic lows while the S&P has been at historic highs,” Netzky admits. But the firm has nevertheless been able to record solid success during that time. “We have been able to maintain competitive perfor¬mance versus our sector and still maintain 10 years of positive returns.”

To remain at the forefront of the alternative investment sector for the coming year, GalNet is constantly looking at ways to evolve as the markets are reaching new highs and lows in the different indices. “Our ability to adapt has allowed us to remain in the forefront of the sec¬tor,” says Netzky.

GalNet was recently named Best Illinois-Based Investment Managers and Best Volatility Arbi¬trage CTA Fund in Wealth & Finance’s Alternative Investment Awards. “We are very happy

In terms of an overriding philosophy, Netzky says openness when dealing with clients is key. “We feel that transparency and client service is crucial to running a firm like GalNet. Investors have a lot of choices on who they want to manage their investments, so top performance is just one vari¬able. Communication and transparency are two others we provide to our clients.”

“Markets are reaching new levels of highs and lows daily,” he says. “These market conditions are dangerous but also full of opportunities. We are constantly analysing the changing vol skew to understand the risks prior to creating alpha in the portfolio. Our evolution as a firm has included maintaining liquidity and the ability to say we were wrong, and as a result adjust the portfolio as needed.”

When seeking an investment manager, clients should be looking for alignment of interest of the manager, transparency, tax efficiency, and perfor¬mance, Netzky says. “GalNet offers all of those requirements as the management team currently represents over 50% of the funds’ assets.

Name: Barry Netzky

There are many things that distinguish GalNet from its competitors and peers, Netzky says.

Chicago, Illinois 60605, USA

Email: info@galnetam.com Website: www.galnetam.com Tel: +1 312 362 2118 Address: 440 South LaSalle, Suite 2908,

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Best AIFMD Fund Platform, Luxembourg

Maitland Maitland’s MS Sicav SIF platform was launched this year.

Kavitha Ramachandran at Maitland told us why it’s been so successful Maitland is a leading global institutional provider of fund administration and multi-jurisdictional legal, tax, fiduciary, and investment advisory services. The group was founded in 1976 in Luxembourg to provide offshore legal and tax advisory services to private and corporate clients. It now has a global presence, with 13 offices across 12 countries and over 700 staff. Maitland is fully independent, owned by staff and management.

With nearly 40 years of international administration experience, Maitland has the institutional infrastructure, size, and resources to assist its clients, whatever their size, location or investment strategy, to meet the increasingly complex requirements of their investors and regulators.

Maitland currently administers US$200bn in assets, US$25bn of which are hedge funds. Maitland provide services to a wide range of onshore and offshore fund structures including alternative investment funds, endowments, mutual funds, and annuities. Our global client base consists of over 3,000 portfolios, comprised of traditional, alternative, and mutual funds.

Maitland provides customized administrative solutions for emerging and established managers between US$50m and US$1bn in assets under management. While emerging managers remain an integral part of our business, we feel that there is a service gap in the mid-tier space as many global institutional administrators have been unable to sustain a high touch, tailored service offering.

Kavitha Ramachandran at Maitland explains how working in alternative investments differs from the more conventional sectors.

“Alternative investments describe a range of strategies that are not accessible through traditional fixed income or equity markets. They include hedge funds, managed futures, derivatives, real estate and private equity, commodities etc.

“Working in alternative investments includes following absolute performance objectives although tracking relative performance using benchmarks is now popular. Alternative assets traditionally use leverage and performance fee calculations ranging from simple to complex and use equalisation. All this requires a good understanding of alternative investment products.”

Ramachandran goes on to explain how it felt to be named Best AIFMD Fund Platform of the Year and to what the firm owes this award.

“We are delighted to be named the best AIFMD Fund platform and we believe that this will showcase Maitland’s unique position in the market as a platform provider using our core strength in fund administration and risk management.

“We have a client-centric model and provide an end to end service offering right from assisting clients with the choice of domicile for their investment funds, to the legal set up, project managing the choice of service providers and on-going administration services.

“Our clients are located round the world and we service them round the clock through our global and local office network.”

Name: Kavitha Ramachandran Email: kavitha.ramachandran@maitlandgroup.com Website: www.maitlandgroup.com Tel: +352 40 25 05 1 Address: Maitland Luxembourg S.A., 58 Rue Charles Martel, L-2134, Luxembourg

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Best in Client Service for Hedge Funds under $30 billion

Maitland

Maitland’s high quality service to a range of clients, from multinational corporates to HNW families has been recognised in our Alternative Investment Awards this year. The firm’s Ted Jasinski told us more The Maitland Group is a global institutional provider of fund administration, and multi-jurisdictional legal, tax, fiduciary and investment advisory services with 13 offices across 12 countries; with US$200bn under administration and over 700+ employees, our service extends across all fund types, structures and investment styles and strategies.

Admiral Administration is the specialist hedge fund administration arm of the Maitland Group, and while we administer funds trading in all asset classes, we have specialisation in esoteric hybrid private equity (ABL, patents, royalties, leasing in assets like airplanes, farms, and trailers), fixed income and derivatives, and all equity products (long and long/short).

Ted Jasinski of Maitland tells us more about this sector. “The alternative industry is dynamic and creative; many of the investment managers and firms employ unique strategies within complex structures and vehicles, which in turn demand intellectual talent, the ability to think ‘outside of the box’, and to be flexible with technology to provide the right customised solutions.

“Larger funds and groups tend to have complex structures across multi prime brokerage and

custodial relationships; they trade securities across all asset classes in global jurisdictions, which means administration firms need to have the right technology platform to properly and efficiently reconcile and price the positions in the portfolio. The industry is becoming more transparent as well, so the ability to accurately report to the managers, their investors, and regulators is critical, and time sensitive too.”

Recently, Maitland was named Best in Client Service for Hedge Funds under $30 Billion by readers of Wealth & Finance magazine. Jasinski explains the firm’s reaction to being awarded this prestigious accolade.

“We are humbled and thankful! Our staff are dialled in to deliver the best possible administration service in the industry to our clients and their investors, and this award recognizes their continued hard work and efforts,” he enthuses. “We are proud of this award and thankful for the recognition. It is a wonderful tribute to the extraordinary people that work at Maitland.”

A specific initiative led to this award for Maitland.

He explains: “Our Investor servicing team is highly responsive, professional and very accountable; we

also utilise our AvatarFM portal to enable efficient and transparent accounting and investor reporting on a real time basis.

“The main differences to be taken into account when working with hedge funds under US$30bn, as opposed to larger ones, include our relationship driven service model, so providing a high touch and proactive approach with our client base adds values to how they run their business.

They can ill afford to unwisely spend from an operational perspective, making outsourcing to a trusted ‘partner’ an important day to day aspect.”

Name: Ted Jasinski Email: ted.jasinski@admiralus.com Website: www.maitlandgroup.com Tel: +1 804 578 4512 Address: 62 Broad Street Road, Manakin-Sabot, VA 23103, USA

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Best in Managed Futures - North America & Best Performing Early Stage FoHF - USA (Steben Select Multi-Strategy Fund)

Steben & Company

Maryland-based Steben & Company specialises in building multi-manager alternative investment funds. Following the business’s award win, we caught up with Senior Vice President of Research & Risk Management, Michael Bulley and Director of Research, John Dolfin for a chat about how Steben is staying ahead of the competition

“Secondly, consistent investor communication and education is paramount. Alternative investments behave differently from traditional investments so financial advisors and investors often require more information about their investments, especially during challenging times.

“Finally, our philosophy is to build funds that we want to invest in ourselves. We believe that if we put investors first, then our products and business will succeed in the long run.”

“

Our philosophy is to build funds that we want to invest in ourselves. We believe that if we put investors first, then our products and business will succeed in the long run

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ccording to Michael Bulley, Senior Vice President of Research and Risk Management at Steben and Company, there are three elements to sustaining success in the alternative investment space. “The first is maintaining a serious commitment to manager research and having a high quality due diligence process,” he says. “Markets and managers change over time and trading systems decay. It is critical to keep our funds refreshed with what we view to be the strongest managers available.

This certainly seems to be the case, with the company’s flagship managed futures fund having operated continuously for more than 24 years, making it one of the longest running managed futures funds on the market. But to what does Bulley attribute the firm’s amazing longevity and why does he believe it still stands out from its competitors after nearly a quarter of a century?

“Our roots are in managed futures funds,” he says, “and we recently applied that expertise to other hedge fund strategies. Our strength is the analysis and due diligence of trading strategies used by both hedge funds and managed futures trading advisors.

“Alternative investments generate profits differently from traditional long-only investments such as stocks and bonds, which of course is one of their primary attractions. The main difference is a lack of correlation – or timing – between alternative and traditional investments, so the addition of alternatives may benefit an investor’s portfolio by reducing its overall volatility.”

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Part of Steben’s success, according to Bulley, is the company’s ability to remain ahead of the game, positioning itself to seek the best outcome for their clients. But this isn’t without its challenges.

due to end soon. Government bond yields and interest rates are near historic lows. Meanwhile, corporate bond markets look frothy with narrow credit spreads and record levels of issuance.”

“There are far more alternative trading strategies to evaluate relative to traditional investing,” he says. “This is one of the main challenges financial advisors face with their clients - having the time and expertise to evaluate all the possible strategies, and then staying on top of changes. That is what we’ve been doing for financial advisors for over a quarter century. Because of our singular focus in this area, it is much easier for us to evaluate and monitor strategies for advisors so they can focus on their clients and their practice.

So what do investors do? Trying to time the markets is always difficult, Bulley says, “but making a strategic allocation to non-correlated funds may help lower overall portfolio risk. We think there are very attractive opportunities specifically in alternative investment strategies that don’t have a persistent long bias to traditional markets. This includes managed futures funds, and certain hedge fund strategies. We launched a new fund last year - the Steben Select Multi-Strategy Fund - to make these strategies available to a wider range of investors and financial advisors. Carefully selected hedge funds can be an excellent diversifier and the funds in the Steben Select Fund have been carefully chosen with the goal of low beta and low correlation to traditional asset classes.”

“It’s an approach that is particularly effective, given today’s challenging macroeconomic environment. The current economic climate presents a real challenge for most investors in deciding where to allocate their capital. Equity markets are richly valued after an extraordinary five year bull-run. The Fed’s quantitative easing policy is

It is for the Steben Select Multi-Strategy Fund that the company won the award for Best Performing Early

Stage FoHF. John Dolfin explained to us a little more about the fund and the company’s key strategies.

“The Steben Select Multi-Strategy Fund is an SEC-registered fund of hedge funds that is available to accredited investors with a $25,000 investment minimum. We launched the strategy in August 2013, and we have enjoyed a strong first year. We focus on hedge funds from around the world that specialize in 4 key strategies including: equity long/short, quantitative equity market neutral, global macro and fixed income relative value.

“We’ve also selected hedge funds that have historically had very low correlation to each other, which can help reduce the fund’s volatility and make it a great diversifier.

“These strategies tend to be more liquid, which can allow managers to reposition themselves more quickly in response to market conditions.

They also don’t have a persistent long bias, which means that they have the potential to generate

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positive returns even in a bearish environment for traditional asset classes.

“Our approach contrasts with many other funds of funds. Many competing funds seem to have invested in more long-biased and illiquid strategies in recent years. This may have helped improve their short term performance, but could leave them exposed to a reversal in the markets.

“There has been a growing interest in mutual funds that employ alternative investment strategies. We think this is an exciting trend, but one that provides both opportunities and risks for investors. Mutual fund vehicles can provide non-accredited investors access to diversifying alternative investment strategies. For many, the daily liquidity is a convenience. But in our opinion, many hedge fund strategies don’t fit easily within a mutual fund structure.

“A mutual fund’s daily liquidity requirement and constraint on leverage means that some strategies simply won’t work. For example, a distressed

debt strategy wouldn’t necessarily be appropriate for a mutual fund since the strategy inherently requires more time and is inconsistent with a daily liquidity requirement. The restriction against performance fee payments in a mutual fund can also create a negative selection bias in manager quality. The end result is that some of these mutual funds end up with what we call ‘hedge fund lite’ strategies, without the performance potential of the same strategies deployed in traditional hedge fund structures.”

So, what’s next for Steben? The business can certainly point to a glittering past but, according to Bulley there are even more exciting times ahead for the company and its clients.

“The truth is that many accredited investors still don’t have access to quality hedge funds,” he says. “A fund of funds structure allows them to get professional manager selection and diversifi­ cation into multiple hedge funds for a much lower minimum investment than if they had gone to each manager directly. We have always felt that

the most important factor for success in hedge fund investing is manager selection. Steben’s re­ search team has 25 years of experience doing just that. Funds such as the Steben Select Multi-Strategy Fund can provide access to non-correlated strategies to a broader audience of investors, and hopefully offer a better balance of liquidity and performance.”

Name: Michael Bulley and John Dolfin Email: michael.bulley@steben.com john.dolfin@steben.com Website: www.steben.com Tel: +1 240 631 7600 Address: 9711 Washingtonian Blvd, Suite 400, Gaithersburg, MD 20878, USA

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Alternative Investment Audit & Advisory Firm of the Year

EY Luxembourg EY was and is a main contributor to helping the alternative investment industry become compliant in AIFMD. Kai Braun, Executive Director, Advisory and AIFM Directive services, told us what else the firm has been doing over the past year

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Y is a global leader in assurance, tax, transaction and advisory services. With 167,000 people based in over 150 countries, it is the most globally-integrated professional services organisation.

The EY Luxembourg office combines EY’s European and global capability with local knowledge to deliver a full range of services to meet clients’ business needs. The local firm has the largest specialised and dedicated private equity and real estate practice as well as the broadest range of services in the industry among local assurance and advisory firms.

Comparing alternative investments, such as private equity and real estate, to the traditional fund sector is like comparing apples and pears, says Kai Braun, executive director and Luxembourg alternatives advisory leader at EY Luxembourg – even though they are both fruits, they are clearly distinct. “While in the UCITS (investment funds regulated at EU level) world, back- and middle-office processes are highly standardised and automated with multiple transactions per day, alternatives require more manual input in order to analyse highly complex transactions at certain moments in time,” he says. “Having a clear internal separation between UCITS and alternatives allows EY to speak the same language than our clients.”

The biggest challenge facing those working in alternative investments, Braun says, is increasingly-enhanced regulation. “Directly linked to that is additional cost. Being compliant while at the same time efficient is the focus of the future.”

EY Luxembourg has recently been named Alternative Investment Assurance & Advisory Firm of the

Year, Luxembourg in the Wealth & Finance Alternative Investment Awards. Such awards act as a benchmark for companies’ hard work, says Braun “Awards like this clearly add visibility to what we are doing on a day-to-day basis and provide for recognition for the work we are performing throughout the year.”

For EY Luxembourg, that hard work has largely involved helping the alternative investment industry become compliant with the Alternative Investment Funds Manager Directive (AIFMD) – an EU directive that came into force on 22 July 2013 – says Braun. “We have developed target operating models for the top five depositary banks on a pan-European level, serviced out of Luxembourg.

Also, we helped over 20 managers in getting AIFMD-authorised with the local regulators.”

EY’s overriding philosophy when it comes to its clients is centred on client service. “In a world that’s more complex and dynamic than ever before, clients expect to be served by the right team of professionals, regardless of service line or geography. It is not enough to be technically excellent – our clients want professional service providers who are connected to their business, responsive to their needs and insightful about their sector and the challenges they face.”

To this end, EY has united all its people to deliver around the concept of exceptional client service.

“Exceptional client service is about EY professionals being the most connected, responsive and insightful in the marketplace,” Braun says.

“Connected means bringing all of EY to our clients with the right people in the right locations, building trust and enriching relationships,” he explains.

“Responsive means the desire and commitment of every person at EY to be proactive, visible and timely. And insightful means sharing EY experiences and a point of view tailored to the clients’ situation, thereby advancing their thinking.

“To be successful, exceptional client service has to be more than something we say we do; we have to demonstrate it every day. Exceptional client service is a fundamental part of how we operate, both strategically and tactically.”

EY aspires to create the highest-performing teams, delivering exceptional client service worldwide, which differentiates the firm from its competitors, Braun adds. “Those teams use cross-cultural strengths to tackle globally-dimensioned issues and they bring together diverse perspectives to create solutions. EY brings great people into our organisation and enables them to perform at their best within the teams in which they work.”

Advisory is a people business, says Braun, “and so when seeking an advisory firm clients should be looking for a firm with excellent soft skills and the ability to understand clients’ needs.”

EY has a clear focus and dedication to the alternative asset classes, he says. “Having the right people with in-depth industry knowledge helps us in keeping up the market leadership, which in return helps our clients getting latest market insights.”

Over the past 12 months, the AIFM Directive has been the biggest challenge in the alternative asset sector. “It was the start of a new era.” EY has worked on the Directive from the day it was first published in order to help its clients understand

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To be successful, exceptional client service has to be more than something we say we do; we have to demonstrate it every day

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the real business implications of this regulation. “Also, we are heavily involved in local and European working groups and well connected to our colleagues around the globe to share latest market insights,” he says.

The AIFM Directive will continue to have an effect over the coming year, along with the challenge of operationally implementing the regulation.

“Alternative investment fund managers will focus on enhancing their operations and bringing costs of regulation to a minimum level, while remaining fully compliant,” he says. “The clear trend will be operational efficiency.”

Name: Kai Braun Email: kai.braun@lu.ey.com Website: www.ey.com/lu Tel: +352 42 124 58800 Address: 7, rue Gabriel Lippmann, Parc d’Activité Syrdall 2, L-5365 Munsbach

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Giving Something Back There’s much more to alternative investments than property, fine art and classic cars.

Marcelle Speller, Founder of Localgiving, tells us how to make a real difference by investing in good causes – and how to make that investment go further

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o most people, the term alternative investments conjures up images of Picasso portraits, crates of grand cru Bordeaux wine, or a 1950s Ferrari.

Investments in this kind of portfolio are on the up demonstrated by the most recent Knight Frank Luxury Investment Index showing an 8% increase.

As the economy shows increasing signs of life, however, more and more individuals with capital to hand are looking to make a bigger difference than merely taking a stake in a painting or an old crate of wine. Hand in hand with the renewed courage and optimism in the markets is a growing investment in philanthropy and a chance for wealthier individuals to feel as though they’re truly making a difference to the world they inhabit.

The Bill & Melinda Gates Foundation has set an incredible precedent for supporting good causes around the world, spending over US$30bn on programmes to eradicate poverty, increase health and boost education in over 100 countries around the world since its formation in 2000. The giving mindset has become more pronounced in businesses too, with Barclay’s Group Chief due to take up the position of Chairman of the charity Business in the Community in 2015, and TSB’s launch as a local bank existing to help communities thrive.

Social responsibility is filtering through big business and it’s in part down to wealthy individuals’ increasingly public altruism. Those who are in the fortunate position of being able to give money to support those in need want to see the difference they’re making. The positive impact of knowing you’re contributing to a better society can’t be overstated. It also doesn’t have to be on the scale of the Warren Buffets and the Bill Gates of the world.

With this impact in mind, at Localgiving we’ve

designed a campaign – Grow Your Tenner – which enables additional rate tax payers (on 45% income tax) to facilitate up to £650,000 worth of donations to local charities and community groups for the cost of £68,750 to that person.

This is achieved through shrewd use of match funding, tax relief on charitable donations and Gift Aid. If an individual gives £100,000 to Localgiving, supporting the hundreds of local charities and community groups who are striving to improve local communities across the UK, that individual can claim an additional 25% (£25,000) in Gift Aid. As an additional rate tax payer, they would also be eligible to claim back 25% of the donation value. The £125,000 value of the donation is then matched with local funders throughout the country seeking to increase the funds available to charities in their area. This gives a Match Fund pot of £250,000. The campaign is then opened to charities, and any donations up to the value of £10 made to local charities are matched with funding from the pot. We’ve found that local donors are very generous when they know their donation is being matched and we would expect public donations to reach nearly £400,000. This means that at the cost of just £68,750 an individual can stimulate over three quarters of a million pounds.

In 2013 we facilitated £1.5m of donations to small charities. This year we’re aiming to generate £4m worth of donations to benefit the thousands of local charities across the country. Many of these are doing underappreciated work in their communities: offering counselling services for specific health problems, helping older people to maintain their independence, or sports clubs which strive to set a good example to young people in the community. These are charities where £100 in donations can often be the difference between their ability to continue the work

they’re doing and closure. When David Cameron launched the Big Society it was met with a mixed response from politicians, the media and the public. Yet the underlying messages of empowering local communities, encouraging people to take a more active role in the improvement of their local area and the support of the work of charities and social enterprises are to be lauded. Donations made to smaller, local charitable groups produce tangible improvements in local communities.

These are the kind of impactful changes that can prove so inspiring to donors and fundraisers alike.

The local charities set to benefit from our 2014 Grow Your Tenner campaign are fundraising for a wide range of worthy causes, including a group who offer free concerts for older people, a charity which offers events, mentoring and support to young people, and a campaign which just hopes to replace their minibus which they use to help people with restricted mobility have access to the wider community.

Not many investments can offer a tenfold return on the initial outlay. Our Grow Your Tenner campaign enables donors to make a bigger difference than they would have thought possible. It might just be the most powerful donation they’ll ever make.

Marcelle Speller, OBE co-founded Holiday-Rentals.com, Europe’s leading website for advertising private holiday homes. When the company was sold, Marcelle attended a workshop at the Institute for Philanthropy, and was inspired to found Localgiving.com. The fundraising platform now works with over 2,000 small local charities and social enterprises across the UK.

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Best Outsourced AIFM Solutions Provider & Asset Valuer of the Year, Europe

Value & Risk

Drawing on deep industry knowledge and experience, Frankfurt-based Value & Risk provides first class evaluation of a full range of financial assets looking at all asset classes and complexities. CEO, Gil Bender, told us more

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lternative investments, generally being private deals, are less transparent than the more conventional sectors, says Gil Bender, CEO, Value & Risk, a Frankfurt-based company that provides state-of-the-art valuation of a wide range of financial products. “The biggest challenge for a valuation company like us is to adapt the valuation models to the available fragmentary information.”

On the one hand, evaluation of alternative investments is a complex, research intensive and time consuming task, says Bender. “On the other hand, the market has expanded in recent years and so has our business in that segment.”

Over the past 12 months, Value & Risk has been able to strengthen its market position as one of

the leading valuation services worldwide. “Although we have been growing rapidly, widening our asset coverage, we are still able to offer our customers individual, innovative, service-oriented and cost-effective solutions,” Bender says.

In order to ensure it remains at the forefront of the alternative investment sector, Value & Risk continually builds up its expertise and adds new products to its portfolio, Bender says. “We increase permanently the quality of our services and let our quality-assurance and data-security systems be regularly audited and certified in accordance with ISAE 3402. We continuously optimise our processes in an ever changing environment.”

Bender says Value & Risk was “very happy and

humbled” to be named Best Outsourced AIFM Solutions Provider & Asset Valuer of the Year.

“Our goal has always been to provide our customers with the best valuation services available.

We see this award as recognition for our expertise and devotion.

“Awards are useful as far as they help the stakeholders to compare the competitors and peers within the industry and to identify the service that could offer them the best solution,” he adds.

Valuation is a very tough and complex business, and as a valuation service that aims to offer pricing solution for any type of investment, Value & Risk needs to continuously evolve, Bender says, taking into account the development of the investment-banking industry on the one hand and

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the increasing regulation of the buy-side on the other hand. “So far we have been able to keep up with both developments.”

At Value & Risk, service is paramount, says Bender. “We are serving the financial industry and our customers expect competent and timely service. All our employees and experts work hard together to satisfy our customers’ needs in the best possible way. In addition, we have a rigorous quality assurance in place, which is regularly audited in conformity with ISAE 3402 (Type 2).

This makes sure that we keep our services at the highest-quality level.”

When seeking a valuer, clients need to be sure that they can count on our valuation results and the service as a whole, says Bender. “It’s a matter of

great responsibility, which we take very seriously.”

The past 12 months have seen a rapid growth in the number of complex structured deals (such as structured loans and SPVs) designed to finance the acquisition or development of alternative assets, Bender says. “In order to meet the increasing demand for valuation of such products we have been building up our expertise and expanding further our team of high-qualified valuation specialists.”

As for the next 12 months, industry innovation due to low interest-rates and the changing regulatory framework will continue to exercise the biggest impact on the financial industry, Bender says.

Name: Gil Bender Email: gil.bender@valuerisk.com Website: www.valuerisk.com Tel: +49 (0) 69 959 2916 0 Address: OpernTurm (18th floor), Bockenheimer Landstraße 2-4, 60306 Frankfurt, Germany

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Best North American Hedge Fund Administrator, Best Mutual Fund Administrator, USA & Best North American Alternative Investments Administrator

UMB Fund Services

Tony Fischer, President of UMB Fund Services, told us how UMB Fund Services’ client-focused approach to business and wealth of industry experience is helping the firm stay ahead of the pack – and why he sees a bright future ahead

“Our clients and associates are at the core of this recognition. Our clients drive us to do a better job every day, and our associates work hard to deliver an unparalleled customer experience to each and every client.

“Because of our commitment to our clients and their commitment to us, we are accomplishing great things together. The reputation for partnership we have developed together is beginning to get out in the marketplace.”

UMB focuses on its people, its processes and its technology, all with an eye towards providing exceptional customer service, Fischer says.

“

Our clients drive us to do a better job every day, and our associates work hard to deliver an unparalleled customer experience to each and every client...we are accomplishing great things together

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MB Fund Services was “honoured” and “humbled” to be named Best North American Hedge Fund Administrator, Best Mutual Fund Administrator, USA and Best North American Alternative Investments Administrator, says Tony Fischer, President of UMB Fund Services.

“What sets us apart from other service providers is that we take an ‘outside-in’ perspective on everything we do. A key component of our corporate strategy is to stay client-focused. We continually strive to put client needs first. With this approach we have achieved a highly satisfied client base, which in turn has generated significant additional business through referrals.

“We also prioritise technology and compliance and make sure we are delivering in both of those areas. In a rapidly changing market with increasing emphasis on transparency and compliance with ever-evolving rules and regulations, we believe it is critical that we provide education and solutions to our clients to address these needs.

This is a major challenge for all service providers.”

When it comes to its clients and providing the best possible service, UMB Fund Services’ overriding philosophy is simple, says Fischer: “Our vision is to deliver the unparalleled customer experience.”

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But while the philosophy may be simple, the delivery is anything but. “We believe it all starts with the quality and integrity of our associates, and their commitment to our vision,” Fischer says.

“It then extends to our willingness to be flexible and innovative and to deliver the best technology, process, and product solutions, so our clients have as many options as possible and practical to deliver their investment management expertise.

“By doing all we can to set our clients up for success, and by focusing on their most important asset – their investors – we set ourselves up for success as well.”

The best third-party administrators are those who have a great breadth and depth of experience and the technology to service the client’s fund, says Fischer, as well as a service model that makes clients feel as if their services and people are an integral part of the client’s own business.

“UMB Fund Services strives to be that kind of service provider. Our clients and their investors trust us with some of their most precious assets, and we want to make sure they can count on more from us than from any other administrator.

We want individual and institutional investors to feel confident that their money managers made the right decision when they chose UMB Fund Services as their administrator.”

Insofar as industry trends, Fischer says hedge funds, private equity funds and registered investment products will continue to experience significant growth, given the re-emerging global economy post-financial crisis.

“We continue to see the emergence of alternative investment strategies being packaged as UCITs globally and as ’40 Act mutual funds in the US, as well as registered private funds,” he continues.

“We expect this trend will continue and grow quite dramatically over the next five years.

“Also, after what has really been a purge in the hedge fund of funds arena, we are starting to see some recovery, and we believe this will continue as managers rebound and develop new approaches such as multi-manager funds.

“We have also observed a great deal of consolidation in the service provider space and expect this will continue. In contrast, we have continued to grow our business through a rather volatile global economic marketplace over the past few years, and we are focused on remaining relevant and innovative. We stick to our core principles and manage for the long term, and that has led to success for our clients – and in turn for UMB Fund Services. We will be here to service clients long into the future.”

Tony Fischer, pictured above, is President of UMB Fund Services, which provides back-office services to mutual funds, hedge funds and private equity funds.

Name: Tony Fischer Email: anthony.fischer@umb.com Website: www.umbfs.com Tel: +1 888 844 3350 Address: 235 W. Galena St., Milwaukee, WI 53212, USA

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Best for Multi-Strategy Portfolios, North America

Matrix Capital Advisors Chicago-based Matrix Capital Advisors promotes a multi-strategy portfolio with low correlation between asset classes to their clients. Michael Wik, Co-Founder and Managing Director, told us how this strategy is lowering overall volatility and increasing returns for the firm’s clients

Michael Wik from Matrix explains more about the opportunities within this sector, and the challenges faced: “The opportunities to add alpha through alternative investments is the biggest advantage over conventional sectors. We like to focus on niche opportunities within specific sectors so understanding the variables that create the opportunity and what can go wrong are much more important. While the investment opportunity may not be main stream it doesn’t mean you are at an information disadvantage.

“The biggest challenge is getting people to understand the role alternative investments serve in their portfolio because they are alpha generating as opposed to market beta. In bull and bear markets, there are always pockets of opportunity to be exploited by investors with focus and a limited amount of capital. Our challenge is to invest before everyone else.”

Recently, Matrix was named Best for Multi-Strategy Portfolios 2014 as voted by Acquisition International readers. Mike explains how it felt to be awarded such a prestigious accolade.

“We were very surprised,” Mike states. “There are so many good firms - no one has a monopoly on good ideas. I think much of our success can be attributed to our willingness to look at investment opportunities that are small in size.

the opportunity to be recognized amongst such a talented group of firms and people.”

Mike continues to explain what it is that sets Matrix apart from the competition, and what they can bring to the table that other cannot.

“Awards such as this, I believe, are very beneficial in terms of name recognition but at the end of the day clients are hiring us because of trust... and performance. Although we truly appreciate

“We have two basic principles: first, create a multi-strategy portfolio that allows clients to stay invested in bad times; second, create portfolios that generate a lot of cash flow. For good service only two things matter - trust and good people.

We have highly motivated staff that does whatever it takes to satisfy the client.

“

We have two basic principles: first, create a multi-strategy portfolio that allows clients to stay invested in bad times; second, create portfolios that generate a lot of cash flow

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M

atrix is an RIA serving high net worth individuals and families. The firm’s primary focus is investment advisory services, with approximately 40% of managed capital being allocated to alternative investments across all asset categories.

“Clients should be looking for people they trust and whose interests are 100% aligned. A history of being able to avoid group think and to fish in small ponds will continue to provide an advantage to firms like Matrix.”

Name: Michael Wik Email: mwik@matrixcapital.com Website: www.matrixcapital.com Tel: +1 312 612 6100 Address: 200 South Wacker Drive, Suite 726, Chicago, Illinois 60606, USA

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Best Global Hedge Fund Operational Due Diligence Firm

Castle Hall Alternatives Castle Hall has taken centre stage in the operational due diligence field, using a new level of technological sophistication to help hedge fund managers cope with the increasing pressures faced by operational risk. Wealth & Finance spoke to the firm’s president and CEO, Chris Addy, about Castle Hall’s innovative ODD platform

The firm, which has offices in Canada, the UK and Australia, is not an investment advisor that recommends funds; rather, it is focused on ensuring investors avoid conflicts of interest. The firm only works for allocators, not managers, thus avoiding the conflicts of interest which can arise when a manager is, or could potentially become, a client.

After news broke of the Madoff scandal in 2008 – when former NASDAQ chairman Bernard Madoff admitted that the wealth management arm of his investment firm was an elaborate Ponzi scheme –operational due diligence stopped being an option and became a necessity, says Chris Addy, president and CEO, Castle Hall Alternatives, and one of the industry’s very first operational due diligence professionals. “It’s now a ‘must-have,’ not just a ‘nice-to-have’,” says Anne Coady, Castle Hall’s Managing Director Castle Hall has developed OpsDiligence, an innovative online platform which allows investors to build due diligence programmes across all asset classes, including hedge fund, private equity and long-only portfolios.

Here’s how it works: Castle Hall firstly adds data, gathered from proprietary questionnaires and a review of key fund documents, to its OpsData online platform.

“

As well as access to detailed information about funds of all types, Castle Hall offers, through its leadership team, the industry knowledge that comes only from decades of experience

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C

astle Hall, with a team of more than 25 staff, is one of the three largest due diligence firms.

Then, through a series of “trust but verify” procedures (these include direct verification of service provider relationships, independent administrator / PB confirmation of fund AUM, and verification of reported performance to the audited financial statements) OpsDiligence’s authentication system, which is known as OpsVerification, validates the data.

OpsVerification can also be combined with a background check to create a comprehensive fraud check.

Next comes Castle Hall’s assessment of the operational strengths and weaknesses of each manager and fund, dubbed OpsReview. This produces a detailed operational diligence report using a consistent format to consider, for every diligence review, the business risk of the manager, the legal risk of the fund, and the operational risk of the control environment.

Castle Hall offers a high level of confidentiality; investors’ confidential diligence information

alternativeinvestmentawardstwothousand&fourteen \ thirty one is always protected, and clients see only their “own” funds in OpsDiligence, which ensures that “hidden gem” managers always remain confidential from other allocators.) Finally, after investment, Castle Hall keeps tabs on ongoing changes in each fund’s operational risks.

After helping investors establish their own due diligence policy, Castle Hall’s monitoring programme (OpsMonitor) includes scheduled updates to OpsDiligence through onsite visits or conference calls, annual financial statement reviews and ongoing media monitoring.

What all this means is that Castle Hall – which has so far completed due diligence on more than 1,000 individual funds, and produced 2,000 reports – is able to separate front office investment research’s advocacy role from the governance, risk and compliance role of back office, operational diligence.

Castle Hall’s continued success in this field recently saw the firm named Best Global Hedge Fund Operational Due Diligence Firm in Wealth & Finance’s Alternative Investment Awards. “We’re very pleased to see our capabilities recognised,” says Addy on the firm’s success in the Awards.

As well as access to detailed information about funds of all types Castle Hall offers, through its leadership team, the industry knowledge that comes only from decades of experience. “Our clients come to us firstly for our resources, and secondly for our expertise,” Addy says.

When seeking a due diligence firm, clients should primarily be looking for a firm that is adaptable, he continues. “They should be looking for coverage of funds, a firm that has the flexibility to provide due diligence on any fund.”

Name: Chris Addy Email: caddy@castlehallalternatives.com Website: www.castlehallalternatives.com Tel: +1 450 465 8880 Address: 1850 Panama, Suite 415, Brossard, QC Canada J4W 3C6

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Property Investing: The Great Global Diversification UK property prices have surged in the past year. Sophie Carter, the UK Director of the US property investment company CityR, says that, for investors, the answer may be to look abroad...

I

t’s no secret that UK property prices have exploded in the last year. Compared to relatively stagnant house price inflation between 2011 and 2013, London has seen house prices shoot up more than 20% in the last year, twice the national average of 10%, stoking fears that a bubble may be swelling to breaking point. When the Governor of the Bank of England announces that the threat of a property bubble is the “biggest risk” to economic recovery, any investor in property can be forgiven for hearing alarm bells.

The growing consensus it seems is no longer “if”, but “when”.

In the UK, house builders faced with massive leverage frequently resort to selling off property as quickly as possible, but on the other side of the Atlantic developers are able to hold out for suitable tenants and a decent rental price. This itself actually acts as an incentive for the market to gear itself toward a particular type of rental model: one focused on multi-family complexes.

According to the US Department of Housing and Urban Development, around 61% of tenants in the USA now live in these multi-family properties, which in turn offers a number of benefits to property investors.

These are uncomfortable thoughts for those heavily invested in UK property, especially when the time it traditionally takes to find the exit route is on the viscous end of the liquidity scale. So what can be done to insulate your portfolio against the threat of house prices falling off a cliff?

Anyone who’s been faced with an empty buy to let property in the UK will understand that it can feel like you’re haemorrhaging money. The owner of a two-bedroom flat in London would lose an average of £1,600 for every month the property lies unoccupied, and if you have more than one property and the vacancy is caused by national economic headwinds you could be facing a double blow. The multi-family approach ensures that rent continues to roll in, even though some units may be in a state of transition.

For many the answer is to look abroad. Sterling is enjoying a period of remarkable strength at the moment. Against the euro, the pound has risen by 8.5% in the last 12 months, meaning a property worth nearly £100,000 last year would now cost £8,000 less to buy. Looking further afield to the United States, which took the full force of the recession, house prices are showing signs of a steady climb, up 5.5% over the last year. In fact some of the most compelling reasons to diversify into overseas property can be found under the skin of the headline figures, in the cultural, economic and regulatory pillars on which a property market is built.

In the United States for example, where land is comparatively much cheaper than in the UK, developers are burdened with fewer overheads when they come to put property on the market.

Of course buying up whole housing complexes comes with a price tag far beyond your average investor’s buying power. However by clubbing together into investment vehicles designed to spread the buy-to-let benefits and risks across a greater number of people, investors can avoid many of the pitfalls commonly associated with property investment and management.

For example, the task of actually managing and maintaining a property yourself comes with its own fair share of headaches, especially if the property is half the world away. Maintenance and upkeep is a constant struggle, and improving

the site to sweeten any capital appreciation also takes a tasteful and cost-sensitive touch. Using a property management company can of course take some of the sting out of the process, but managing them can often become quite a job in itself.

Furthermore, those who have invested directly in real estate will be acutely aware of the risk of non-payers. Dangerous, damaging or downright cheeky tenants can take all sorts of liberties in this country that wouldn’t be given the time of day overseas. Looking again to the United States, landlords have much greater powers to eject unruly tenants, leading to a much more regular and reliable form of rental income. This creates a rental market which is much less prone to shocks from the tenant side, giving investors in the sector greater ability to forecast returns.

By eliminating the need for hands-on property management, and reducing the risk of vacant units, property investment clubs can offer investors access to far flung property markets without the need for painstaking personal involvement.

As people rightly look to diversify their portfolios beyond traditional investments on the one hand, and the inflating UK economy on the other, there are some in the alternative investment space making foreign shores feel closer than they ever have before.

CityR specialises in investing in US property, focusing on complexes for families, which offer an exceptional opportunity for both regular rental income and capital gain. For more information, visit www.cityrgroup.com

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By clubbing together into investment vehicles designed to spread the buy-to-let benefits and risks across a greater number of people, investors can avoid many of the pitfalls commonly associated with property investment and management

“

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Best in Secondary Investments, USA

Second Alpha Secondary direct investing is a challenging and highly specialised field – and one in which Second Alpha is leading the way. Wealth & Finance spoke to Second Alpha’s co-founders, Richard Brekka and Jim Sanger, about how the firm is meeting the needs of stakeholders in the next wave of high-growth companies

S

econd Alpha Partners is a private equity firm that focuses on direct secondaries. “Secondary direct investing is a very specialised activity that involves a firm like Second Alpha buying stakes in high quality venture-backed, growth-stage and middle market private companies from existing shareholders who desire shortterm liquidity,” explains Richard Brekka, managing partner and co-founder of Second Alpha.

“The second way that Second Alpha’s approach is distinguished is in the firm’s intense focus on risk-adjusted returns in a market where that risk is often given limited consideration. The Second Alpha team looks for substantial downside protection in its deals, allowing the firm’s LPs to benefit not only from discounted pricing and a shorter average holding period but also an ameliorated downside risk.

“Those selling shareholders run the gamut of different types of stakeholders in private companies – Second Alpha purchases shares from founders, company executives, angels, VC firms, financial institutions and corporate investors.”

Direct secondary investments are typically made at significant discounts to market rates, Brekka continues. “Since Second Alpha targets mature, well run private companies, this can be a very attractive way for our LPs to get into strong companies at great prices.”

“In general, our firm aims at providing upside returns like that of top decile venture capital or growth-equity firms, with the risk profile of top decile late stage private equity investors.”

Managing partner and co-founder Jim Sanger feels that Second Alpha’s approach is further distinguished from other types of venture capital or private equity investing in two ways. “The first is that we target companies that we believe have the right set of characteristics that suggest they will be ready to exit within around three years of investment,” he says. “For us, this targeting is done based on a large amount of data analysis.

Ultimately, this approach to targeting investments means that we filter deal opportunities from the perspective of when and how they will exit in the relative short term.

Investing in private companies is very different than trading in public companies – so different, in fact, that it requires an entirely separate play book, says Brekka. “Indeed, our work on the direct secondary side often involves a wide range of analytical, structuring and deal-origination work not common to more well-known alternative investment players such as private equity firms, venture capital funds or even secondary investors who focus on the purchase and sale of limited partner interests in funds.”

Sanger says that, because of its focus, Second Alpha needs to invest a great deal of time, energy and thought to stay in the flow of venture capital and private equity activities. “All of Second Alpha’s team members devote attention to the nurturing of our industry networks since secondary investing is a growing but nascent market still dependent on relationships,” he says.

But relationships alone are not enough. “And so Second Alpha also has invested time and capital in developing its own proprietary databases that track tens of thousands of tech, media and telecommunications companies as well as the investment activities of angels, venture investors and private equity funds,” Sanger says.

In business, there are always both challenges and opportunities. And Brekka feels the firm’s area of alternative investments is heavily weighted on the opportunity side. “The amount of private company creation over the last 10-15 years has been enormous,” he says. “However, there is much more scale required for tech, media and telecommunications companies to exit through trade-sale or IPO. As such, most traditional earlier-stage investors in these companies face massive pressures for liquidity as time goes on. With average holding periods growing to around 10 years for a venture investment – and with most funds structured on 10 year terms – investors are in a great bind.”

Second Alpha, and the market it is helping develop, creates a solution for investors needing liquidity, Brekka continues. “We treat sellers with a great deal of respect, they can sell us only the portion of their stake that they need or desire to make liquid, and we can even structure transactions in ways that allow these sellers to avoid tax issues. We are also conscious of the positive effects that our firm’s transactions can have on the companies in which we buy our stakes, and the investor syndicates who remain supportive

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“On the challenges side, I think it’s fair to mention how busy we are,” says Sanger. “With very few if any players attempting to do exactly what Second Alpha is doing in a rapidly-developing area of alternative investing, our team has to constantly find ways of coping with a high volume of incoming deal opportunities. This can be especially challenging because of the amount of analysis we do, but it’s a good kind of challenge to have. To help, we’ve recently increased the bench strength on our team. And we are currently searching for another hire as well.”

One notable success for the firm over the last 12 months was finalising the first close on Second Alpha’s second fund, says Brekka. “Over the same period, we’ve made investments in some wellknown companies with very attractive terms.”

“

We intend to make sure Second Alpha is there to provide the liquidity solutions needed to meet the needs of a new, wider array of stakeholders in the next wave of high-growth companies

“

of them. Often by creating an exit option for one investor who needs to get out of a private company, we see company’s executives become more focused on growing their companies. And by stepping into syndicates as an active, supportive new investor, we can also help re-energise their commitment as well.”

Second, the quality of the interactions that we’ve had with all the different stakeholders involved in the many transactions on which we’ve worked over the last twelve months – and not just those involved in the deals that closed, but also those who worked with us on the deals that that did not. And third, we would be remiss if we overlooked the hard work and support of the entire Second Alpha team which includes not just our investing partners, but our support staff, finance team, operating partners, strategic advisors and limited partners.”

Awards like this can be very important, adds Sanger. “Today, perhaps more than ever, investors in all of the alternative asset classes need to be mindful of getting their message out as broadly as possible.

“That said, reaching out to a broader community is particularly important for Second Alpha. Many of Wealth & Finance’s readers may have never before encountered secondary direct specialists like us. So this award allows us to inform more investors about the emerging market in which we participate.”

How will Second Alpha ensure it remains at the forefront of the alternative investment sector for the coming year? “We think about this question every day,” says Sanger. “We believe that one of the keys to the secondary direct market is in innovating our deal origination, investment due diligence and portfolio development based on increasingly more sophisticated data analysis. We see a very large number of opportunities come to us, but only those opportunities that have a realistic prospect of exiting within our target holding period are viable opportunities for our fund. We feel that the best way to create and measure the effectiveness of this type of sophisticated analysis is by collecting and processing as much industry data as we can. It’s still early days for us, but we’re trying to create formal analytics that help us identify the right opportunities and drive great decisions.”

As for what sets Second Alpha apart from its few direct competitors, Brekka says it usually boils down to three points. “The first point is the importance to Second Alpha of time and timing,” he says. “For Second Alpha, everything begins and ends with the clock; it’s a key orientation for all firm investment activities – to remind us of this, we’ve even made a clock part of the firm’s logo.

Second Alpha was recently named Best in Secondary Investments, USA, by Wealth & Finance.

“It is always gratifying to win recognition in one’s industry,” says Brekka. “So we’re very appreciative both to Wealth & Finance and those in the industry who nominated us. Although the specific comments made by those recommending us for the award were not disclosed to us, we would ascribe winning this award to three general characteristics. First, the innovative nature of Second Alpha’s approach to secondary market investing.

“The second point is our firm’s active investment mentality. Secondary investors, in general, tend to be passive investors. However, the team at Second Alpha has the capacity – and generally the inclination – to be very active as investors. This capacity for hands-on work manifests itself prior to investment in terms of more rigorous than normal due diligence and deal structuring work, and after investment in terms of the energy level and commitment we bring to the support of our portfolio companies.

“So while other firms often base their investment decisions primarily on pricing, our firm looks first at the potential hold-time for an investment, before diving into an array of other considerations.

Basically, the time-to-exit is a gating item for us.

An investment is a Second Alpha investment only if it displays limited downside risk and a very high probability of providing a strong capital-on-capital return within around a three-year holding window.

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“The third point of differentiation for Second Alpha lies in our data-driven approach. Second Alpha is highly data-oriented in its sourcing and management of portfolio investments. The firm develops its own automated sourcing approaches, proprietary databases and analytics to drive results.”

Over the coming year there are many changes that will have an impact on the industry, says Sanger. “At the moment, we’re in a period of dramatically-increased private company creation, spurred on not only by the availability of capital from traditional venture capital and private equity sources, but also by a massive increase in angel investment activity and crowd funding options.

“So while Second Alpha is today crafting deals in mature companies that have stakeholders that are largely founders, executives, VCs and private equity funds, our firm is also very conscious of the need to open channels with a growing and more diverse community of investors as well.

“And this outreach begins now, while world equity markets are relatively effervescent. Because we anticipate that many angels, super angels, and crowd funding platforms will have acute liquidity needs when the markets become a little less fizzy over the next 24 months, and we intend to make sure that Second Alpha is there to provide the liquidity solutions necessary to meet the needs of a new, wider array of stakeholders in the next wave of high-growth companies.”

Name: Richard Brekka and Jim Sanger Email: rbrekka@secondalpha.com jim@secondalphacom Website: www.secondalpha.com Tel: +1 212 446 1600 Address: 276 Fifth Avenue, Suite 901, New York, NY 10001, USA

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Best Value Added Real Estate Fund, UK

UBS Central London Office Value Added Fund (UBS-CLOVA) UBS-CLOVA has had an outstanding year. Wealth & Finance spoke to portfolio manager Sam Sananes about the Fund’s continuing success

UBS Central London Office Value Added Fund (UBS-CLOVA) is a value-added, closed-ended property fund specialising in investments in the central London office market. The Fund, which is managed by UBS Global Asset Management, Global Real Estate, seeks to acquire properties that require active asset management in order to unlock the potential value from the investment, and the current portfolio contains a blend of multi-let properties and refurbishment projects.

The Fund, which was previously named UBS South East Recovery Fund (UBS-SERF), changed from an open- to a closed-end structure on 16 June 2011 when it focused its investment strategy on central London ahead of an anticipated recovery in the market.

It’s been a hugely successful last 12 months for the Fund, which, as of 30 June 2014, delivered a total return of 44.2%. Over the last three years since its inception in June 2011, it has delivered a total return of 22.7% p.a.

This success has come about through a lot of hard work, says Sam Sananes, portfolio manager at UBS. “The team works very hard to add value,”

he says, adding that they operate a disciplined investment and asset management approach, always adhering to the strategy they’ve put in place.

Awards like this are important to businesses like UBS, Sananes says, because they boost confidence and affirm that the company is heading in the right direction. “They’re also useful tools for investors to judge managers’ performance,” he adds.

In terms of an overriding philosophy with investors, Sananes says the team focuses primarily on one thing: communication. “It’s absolutely everything,” he says. “In many ways, regular communication with investors can be as important as investment performance. Clients need to be informed. Knowledge helps investors to maintain confidence in the Manager, and it buys you longterm goodwill.”

It’s a hugely competitive market, he says. “The appetite for risk has grown considerably. Competition for assets in the value-add space is high, both from overseas and UK-based investors.”

As for challenges over the coming year, Sananes says they will lie in adopting new regulations.

UBS-CLOVA was recently named Best Value Added Real Estate Fund, UK. “I was delighted to win,” Sananes says. “While we don’t come to work just to win awards, it’s nice to receive recognition.”

Name: Sam Sananes Email: sam.sananes@ubs.com Website: www.ubs.com/realestate Tel: +44 20 7901 5193 Address: 21 Lombard Street, London EC3V 9AH

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Best Asset Managers, USA & Best Fund of Funds Investments Team, USA

Northern Trust Asset Management

After 125 years of delivering superior client service, Northern Trust continues to innovate in an ever-changing investment landscape Northern Trust Asset Management is the investment management business of Northern Trust Corporation (Nasdaq: NTRS), a leading provider of asset management, asset and fund administration, fiduciary and banking solutions for corporations, institutions and affluent individuals worldwide.

The firm has recently been voted Best Asset Managers, USA and Best Fund of Funds Investments Team, USA, by Wealth & Finance magazine.

August marks Northern Trust’s 125th year of delivering superior client experiences. Firm assets under management (AUM) were US$915.4bn as of March 31, 2014. The Northern Trust Alternatives Group, within Northern Trust Asset Management, houses the hedge fund and private equity business, including fund of funds and custom programs totalling in over US$3.7bn in assets.

Given the complexities and ever changing market opportunities and environment, success in

alternatives requires not only deep experience and expertise, but a disciplined and ongoing monitoring and due diligence process. Northern Trust Asset Management has three separate teams – investment, compliance and operations – that conduct due diligence on any manager that is underwritten and invested in the firm’s program. The process is extensive (often lasting several months) and includes monthly phone calls, write-ups, and semi-annual, in person on-sites.

Alternative investments are, of course, an ever-changing landscape. But they present huge opportunities, given the need for investments that complement the broader portfolio with unique sources of return and low correlation. Northern Trust Asset Management has the ability to partner with some of the top hedge fund and private equity managers in the world and provide its clients with access to investment strategies that would otherwise not be available to them.

Northern Trust Asset Management has the right individuals in place to grow the business and successfully provide solutions to clients and investors, and to continue generating strong risk-adjusted performance. By listening to its clients, the firm is developing unique products to meet the growing demand for alternative solutions.

Website: www.northerntrust.com Tel: +1 866 876 9944 Address: 50 S. LaSalle, M12, Chicago, IL 60603, USA

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Best Family Office Investor, UK

icf management limited

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Founded in 2005, icf management limited has quietly grown into a highly-respected player in the family office arena. The firm’s Mark Lynam and Jeremy Suffield told Wealth & Finance about their history and their plans for the future

i

cf management limited may not be a high profile name but the individuals and ethos behind the firm have a deep and broad set of credentials. As an FCA-regulated investment manager, icf (originally Investment Consulting for Families) was founded to provide asset allocation and manager selection services in the family office arena.

Established in 2005, the rationale was to provide support and help for the complex investment challenges faced by families, wealthy individuals and their advisers.

Mark Lynam is the founding director and a handson fund manager at icf. Mark has witnessed a lot of change in the investment world having started his career in 1984 at the investment division of J Henry Schroder Wagg, now known simply as Schroders. Mark started as a fund manager’s assistant before moving on as a fund manager, investment director and asset allocator for a number of well-known firms such as Gartmore and Thornton (part of Dresdner Bank and a constituent part of Dresdner RCM). He left the world of institutional management when he was headhunted in 1999 to become MD of a leading London-based family office. It was in this role that Mark and Jeremy Suffield first joined together to manage money as a team and jointly develop the investment platform that allowed other families to benefit from their experience. Joining the City in 1987 Jeremy spent the majority of his formative years at the merchant bank Robert Fleming developing a strong track record within the global portfolios group where he was responsible for a wide variety of regional, and international mandates including, importantly, private client briefs.

Between them they observe that in the late 1990s, the family office concept was less well known than currently but the principle of wealthy families employing their own investment professionals rather than handing over control of their monies to a private bank was well established.

They believe that the investment teams at family offices are not shackled by the herd like mentality endemic in the corporate world of fund

management companies. The family office aims to achieve investment success, not commercial success, and wealth preservation is at the heart of this organisation.

From an investment structure perspective Mark and Jeremy are strong advocates of the key investment tenet that no single asset manager has a monopoly on being the best in all investment strategies at all times. Therefore the multi-manager and fund of funds structures are a required common sense approach to portfolio management. In their opinion family offices were in the vanguard of this now well established and widely accepted approach. Mark and Jeremy honed their multi-manager skills in this fertile family office environment, where non-traditional strategies and managers are included alongside more traditional investments as a matter of course.

Alongside their experience in asset allocation and portfolio construction Mark and Jeremy have built up an extensive knowledge of managers and funds with an emphasis on the less well researched or “under the radar” managers. Often these fund managers do not court publicity, but like them prefer to manage money in a manner that they understand and feel comfortable with.

They work with mandates that enable them to deliver the wealth preservation families desire. icf’s core skill is to blend these managers together to further enhance this wealth preservation. Independence and diversification are key values that underpin their investment philosophy.

At the turn of the decade the business took on a new direction as they were approached by some investors, who knowing their family office pedigree and investment acumen, wanted them to manage a portfolio of absolute return strategies. Mark says, “… the opportunity arose for icf to manage a fund, and we thought why not? We were worried that it might be an administrative distraction but the advantage of a regulated fund structure is that it allows us to outsource functions such as custody and daily valuations so that

we can concentrate on what we know and like – investment management – without distraction”.

The portfolio became the VT icf Absolute Return Portfolio – which is an FCA-regulated UCITS III OEIC for which they have earned industry recognition as they are both ranked Citywire AA. Currently the fund is sterling denominated but icf are considering launching a euro share class shortly.

In keeping with their “we know what we like and like what we know approach” this fund venture also involves another like minded long term investor, Richard de Lisle, who is the investment manager for a sister fund named the VT De Lisle America Fund. However, unlike Mark and Jeremy who cover the broad waterfront of multi-asset investing Richard is a dedicated stock picker. His longstanding area of expertise is the US stock market where he has been investing since the mid 1990s. The VT De Lisle America Fund typically invests the majority of the portfolio in stocks with a market capitalisation of less than US$500m and his research based stock picking style has been recognised recently with the VT De Lisle America Fund being the winner of the Lipper Fund Awards 2014.

Jeremy points out that having garnered investment recognition and now a peer group award courtesy of the Wealth and Finance International awards “we are looking forward to our 10th anniversary next year with considerable anticipation.”

icf

management limited Name: Mark Lynam and Jeremy Suffield Email: ml@icfmanagement.co.uk js@icfmanagement.co.uk Website: www.icfmanagement.co.uk Tel: +44 (0) 20 7127 4874 Address: 40 Gracechurch Street, London EC3V 0BT

forty two / alternativeinvestmentawardstwothousand&fourteen Boutique Asset Manager of the Year - New York & Best New Fund - USA (SECOR Alpha Fund)

SECOR Asset Management of the investment process.

SECOR is globally-represented, yet offers the key service you’d expect from a boutique firm SECOR Asset Management is a global asset management firm based in New York and London with more than US$31bn in assets under management.

The firm, which was founded in 2010 by Ray Iwanowski and Tony Kao, offers its clients deep experience in multi-asset and quantitative investing, with a focus on mitigating risk and protecting capital.

SECOR’s Quantitative Strategies platform, managed by Iwanowski, offers institutional investors customised, systematic-based investment strategies in two forms. These are the SECOR Alpha Fund, which is the firm’s flagship quantitative hedge fund, and separately managed accounts, which are based on an investor’s specific investment objectives and criteria.

The SECOR Alpha Fund is a systematic macro fund that invests across a wide range of asset classes, strategies and geographies. The Fund seeks to

provide investors highly diversified sources of return with very low correlation to equity and fixed income markets and other alternative investment strategies. The Fund’s portfolio includes over 100 global markets and more than 3000 individual stocks.

SECOR’s Alpha Fund aims to design sophisticated, diversified investment strategies that allocate and manage risk, and adapt to the current environment. SECOR dynamically recalibrates its models as economic, geopolitical or market circumstances require it, while remaining firmly committed to a systematic approach to investing that is core to their investment philosophy.

The Fund’s guiding principles include: delivering diversified sources of return, recognising that timing can add value, optimising risk management by making it fully integrated, dynamic and systematic, and avoiding over confidence in any element

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Most Trusted Private Investment Office of the Year, UK & Best CEO of a Private Investment Office - UK (Steve Rubens)

Ruby Capital Partners

Consistently high standards of client service and a focus on transparency have seen Ruby Capital Partners, and its CEO, honoured in this year’s Alternative Investment Awards Ruby Capital Partners is a regulated alternative asset management and advisory business formed in 2005, spun out of a major European insurer’s proprietary investment activity. The firm manages an off shore multi-strategy fund and advises institutions and families on bespoke investment projects The firm has been named Most Trusted Private Investment Office of the Year UK, and Best CEO of a Private Investment Office UK by Wealth & Finance. CEO Steve Rubens commented: “I thank my partners, directors and service providers such as UBS and Apex Fund Services IOM for their support and help. Whether or not your business is US$1bn or US$1m having a strong culture and the desire to succeed are good traits.

“It’s important to strive to be robust. Being recognised for an award is great but in reality is just fleeting. It’s about the future not the past.

“At Ruby we have put great emphasis on client service. For a sector that has, in the past, been extremely opaque to investors putting an emphasis on explaining to our clients what we

do and how we make returns has been critical to our success. This requires resources, but ones that we feel that clients not only like, but increasingly need; this is undoubtedly one of the reasons we have been successful in these awards.”

Typically, clients look for trust, transparency, experience and the ability to successfully navigate the challenges that markets present. “Ruby Capital is not shy of buying insurance to hedge the wider portfolio as its often what we don’t know that can often hurt us more than the known risks,” explains Rubens.

“So we construct the portfolio to expect the unexpected and think of the downside risks. We also give independent advice to families and institutions and are involved in a variety of investment joint ventures.”

As with any industry, there are challenges ahead and Rubens explains what he thinks Ruby Capital will see over the next 12 months.

“As ever, regulation and compliance continue to dominate the operational side of the business, but

it’s fair to say that the industry is in an “implementation” phase and so there is light at the end of the tunnel.

“On the investment side the overarching trend has been that of continued governmental intervention. This continues to lead to confused although unvolatile markets as we are in untested territory in terms of economic theory. There feels an air of complacency in markets to our minds and this is unlikely to continue at which point being hedged is going to be crucial.”

Name: Steve Rubens Email: steve.rubens@rubycap.com Website: www.rubycap.com Tel: +44 (0) 20 3514 1255 Address: 6 Dorset Street, London W1U 6QL

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Alternatives Fund Solutions Team of the Year, UK & Best Alternative Investment Fund Manager, UK

Deutsche Asset & Wealth Management Deutsche Asset & Wealth Management strives to deliver leading investment strategies, a highly efficient investment platform and superior client services to institutional investors, private clients and intermediaries

W

ith ¤934bn assets under management (as of March 31st, 2014), Deutsche Asset & Wealth Management (DeAWM) is ranked amongst the top 10 bank-owned global leaders in asset and wealth management. With our scale and expertise we partner with our clients to find solutions for complex investment questions.

Our investment professionals are located in all major financial centres. We offer individuals and institutions traditional and alternative investments across all major asset classes.

We also provide tailored wealth management solutions and private banking services to highnet-worth individuals and family offices. We understand that our clients require us to assist in protecting their assets.

Deutsche Bank has deep roots in its home market of Germany. A strong partner for clients, we are committed to industry leading standards in risk management, which help us to protect the assets of our clients in an ever-changing market environment.

DeAWM develops and manages sophisticated tailor-made investment solutions to create lasting value for clients. Whether you are looking to invest in a mainstream asset class, in a niche alternative or if you need personalised wealth management, you’ll find what you need with us.

Our investment solutions respond to any risk, return, liquidity or geographical preference and are underpinned by rigorous risk management. We

also make it easy for you to invest in high-quality funds from other companies. We give you more choice and provide independent advice that’s right for you.

We always treat each client individually. At the same time, our integrated investment teams leverage our global scale to create powerful investment solutions that deliver top-ranked performance.

To benefit from DeAWM’s wealth of expertise, we work as one team. Whether you are a private investor, an institutional investor or an intermediary In every country and across all investment solutions, DeAWM is the right investment partner to create lasting value for you.

We aspire to combine superior product performance with environmental and social responsibility towards our clients, our employees, our shareholders and the society we live in.

DeAWM draws on proprietary global research insights from internal industry- and segment-specific specialists, as well as research from independent third party experts.

Our Value Approach summarises the unique strengths of DeAWM: financial stability, thought leadership and our one-team-approach.

We create value for our clients by unlocking the full intellectual potential of our organisation and operating as one team across all functions and regions.

In combination, three key factors generate lasting value for our clients (1+2+3 = Lasting Client Value). We call this our DeAWM Client Value Approach.

Our mission is to create lasting value for our clients. As one team we leverage all of our capabilities to seek to find the best solutions for our clients’ individual needs.

We understand all types of investors: individuals, institutions as well as intermediaries.

The individual needs of our clients are diverse in terms of investment size, product, service requirements, and preferences in terms of risk, return, liquidity and geographic region.

alternativeinvestmentawardstwothousand&fourteen \ forty five three To service the full spectrum of clients in the most individualised way, specialised coverage teams as dedicated client advisors provide convenient and efficient gateways to DeAWM. Client advisors are fully dedicated to you: listening to your needs, connecting you to our global resources and providing tailored solutions.

Our investment solutions span traditional to alternative investments, incorporating DeAWM’s comprehensive product offering and the best third party products across all major asset classes.

Our solutions range from investment mandates, individual solutions and investment products such as mutual funds.

Collaboration is at the heart of everything we do. We connect leading investment professionals with decades of experience from all over the world and from a broad range of educational and cultural backgrounds. We treat each client as an individual and we take the time to understand our clients’ needs. We provide seamless access to all of our resources and work as one DeAWM team to deliver lasting value for institutional and private investors globally.

For us, being international means much more than having a presence in all key markets worldwide. Our people represent more than 60 nationalities, speak more than 70 languages and are part of the local communities of more than 140 cities.

We do not only speak our clients’ languages, we also understand their unique needs. Such diversity – in terms of culture, language, expertise, global reach and local presence – Is another element of our promise to work as one team for the ultimate benefit of our clients.

Website: www.deawm.com Tel: +44 (0) 20 7545 4907

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Overall Absolute Return Strategy Advisor of the Year

AppleTree Capital Despite its relatively small size, AppleTree Capital, an independent financial advisor specialising in emerging markets and absolute return strategies, offers the best of both worlds in terms of experience and service. The company focuses on a niche market of the Emerging Markets world: emerging Europe and Turkey – markets with high economic growth potential and room for superior risk adjusted returns. Managing Director, Dimitris Apistoulas told us more

A

ppleTree Capital is an alternative investments advisor specialising in emerging markets and absolute return strategies.

The firm’s founding members, Michael Nicoletos and Dimitris Apistoulas, have between them over 20 years in financial markets and they have been working together since 2005. AppleTree Capital focuses on a niche part of the emerging markets world (emerging Europe, CEE and Turkey), which is often overlooked by the traditional emerging markets funds.

The investment team’s experience in the region (Greece, Russia, CEE, Southeastern Europe and Turkey) is a valued asset which allows it to timely identify and exploit investment opportunities. This is achieved via long-established relationships with local professionals who provide direct feed on political and financial developments; out-of-the box investment idea generation; frequent road shows and company visits; and in-house research to identify valuation mis-pricings.

AppleTree Capital’s mission is to deliver superior risk-adjusted returns for investors while adopting best industry standards with regards to transparency, liquidity and risk management. This is ensured by cooperating with world-renowned business partners as well as the liquid and transparent structure of AppleTree’s funds which offer monthly liquidity and excellent transparency to investors.

In 2013, AppleTree Capital’s flagship fund, the Violet Emerging Markets Fund, yielded a net return of 28% in US dollar terms, outperforming its benchmark by a wide 37% (MSCI EMEA).

YTD in 2014, Violet is again outperforming its benchmark (clocking a +9% net return vs +2% rise of the MSCI EMEA Index.

In May 2014, AppleTree launched the Metron Absolute Return Fund, a long /short absolute return strategy with low volatility aiming to protect capital and achieve returns across the market cycle.

“The alternative investment industry is undergoing a significant transformation”, says Dimitris Apistoulas, Managing Director at AppleTree Capital. “Regulatory changes across the globe and the emergence of ‘competitive’ investment products make the landscape challenging. The times of two guys, a Bloomberg and a dream are evaporating fast.”

Companies must ensure that they have all the checking and monitoring mechanisms in place to reduce operational risk, says Apistoulas. “Structure, risk management and transparency become more and more important aspects of the game.

We at AppleTree focus in what we feel are the cornerstones of success in alternative investments: experience, discipline, transparency and liquidity.”

AppleTree investors benefit from this focus on transparency as detailed portfolio statistics are available to them on a monthly basis. Net

monthly return, risk metrics, top five exposures as a percentage of the portfolio as well as regional and sector exposures as a percentage of the portfolio are all provided both by AppleTree (in the monthly newsletter) as well as independently, from the administrator.

Each AppleTree investor is given a unique key code which provides access to portfolio statistics via the administrator’s secure web portal.

Investors liquidity (subscriptions, redemptions) is monthly, and there are no side-pockets or gates.

“In terms of industry prospects, we believe that the strong flow of institutional money to alternative investments will continue, especially in liquid, transparent long/short equity strategies,” says Apistoulas. “Customers will be pushing for liquidity, portfolio data and tailor made fee arrangements.”

Companies must ensure that they have all the checking and monitoring mechanisms in place to reduce operational risk, Apistoulas continues.

“Structure, risk management and openness are becoming more and more important. We expect hedge funds to focus on compliance, and the attraction of new assets via differentiated strategies.”

Funds of funds should continue to attract assets, but investors will be looking for more niche oriented strategies, he says. “Moreover, traditional investors like pension funds may be inclined to increase their allocation to alternative invest-

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“Most assets will continue to flow to the largest managers as has been the case in the past years.

However, smaller managers like AppleTree can attract interest by offering strong returns, a high quality set up and a niche market universe where potential risk-adjusted returns are high.

“Despite the changes, we are positive on the industry. Competition is very high but this is of great benefit to investors who have a wide pallet of products to choose from. And as long as investors are happy, the prospects of the industry are bright.”

When asked about the firm’s major successes over the past 12 months, Apistoulas says, “Our size and strategy allows us to enter into specific trades based on catalysts/fundamentals irrespective of market capitalisations and index participation.

This, however, is implemented in a way that does not compromise the liquidity of the portfolio.

“Exposure sizes ensure that the whole portfolio can be liquidated within a maximum of three trading days. Our local presence the ground generates ideas and allows us to enter into thematic trades with attractive risk/ return characteristics, beating benchmark returns.”

In 2013, AppleTree managed to do this in two ways, Apistoulas says. “Firstly, by successfully entering the Greek market at a very early stage. Our feedback was such that indicated a major dislocation between market perception and reality. And secondly by successfully going short the Turkish market given that its macro fundamentals seemed to be ignored by the general market.

“In early February 2013 our extensive network in the Greek real economy gave us an early indication that the touristic season in Greece (tourism accounts for ca 18% of GDP) would be particularly strong. We then decided to follow the theme and position our Greek portfolio accordingly. This was done via initiating significant exposures in Aegean Airlines (AEGN GA), the most suitable listed proxy for tourism in Greece (trading at a huge discount to international peers) and the Greek GDP Linker.

“The GDP-linked warrant is a PSI sweetener to investors, offering a coupon if specific GDP thresholds are achieved. When in May 2013 the

“

Competition is very high but this is of great benefit to investors who have a wide range of products to choose from. And as long as investors are happy, the prospects for the industry are bright

“

ments to enhance returns and reduce downside volatility. This would provide a significant pool of liquidity for hedge funds. However, the process should be relatively slow.

first data on tourist arrivals came out beating expectations, the theme played out sweetly offering returns in excess of 70% for our two portfolio positions. These were trimmed/ closed by the end of Q3 for a hefty profit.

“In a similar manner we have positioned the portfolio to benefit from rising macro and political risk in Turkey and a positive economic outlook in Romania, themes that all played out within the course of the year. These ‘thematic trades’ were the major driving force behind the Violet Emerging Market’s Fund significant outperformance in 2013.

“These conviction trades rewarded us with very strong returns. Hence the Violet Emerging Markets Fund managed to clock a return of +28% in US dollar terms for our investors, beating our benchmark MSCI EMEA index by a strong 37%.”

Strong risk adjusted returns continue within 2014 (+9%), despite the weakness in Russia and Greece, says Apistoulas, adding that the team managed to identify risks early, positioning the portfolio to benefit from a market pullback.

“Our strong performance and consistency have set the basis for growing our pool of assets,” he says. “At the same time, we managed to increase our bouquet of products with the launch of our new low volatility/absolute return fund within May 2014, the Metron Absolute Return Fund.

Metron complements our higher risk emerging market strategy, providing more flexibility to our investors.”

To ensure it remains at the forefront of the alternative investment sector for the coming year, AppleTree Capital will continue to strive for the best both in terms of product structure, transparency and liquidity for its investors, while aiming for strong risk adjusted returns, Apistoulas says.

“We have already launched the Metron Absolute Return Fund to complement our product offering with a lower volatility absolute return fund, while we are active in looking at new longer term product offerings for investments in SE Europe and Greece, to take advantage of the forthcoming economic recovery and beaten down valuations in specific asset classes across the capital structure.

“We aspire to repeat our strong performance with the Violet fund for 2014 and to produce an attractive, low volatility return with our new launch, the Metron.”

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AppleTree Capital has been named Overall Absolute Return Strategy Advisor of the Year in the Alternative Investment Awards. Apistoulas says the award has come about only after plenty of hard work.

“AppleTree Capital launched its first fund in May 2010, with the European financial crisis peaking.

The first two years were pretty challenging not only in terms of the equity markets in our investable universe but also in terms of perception.

Appetite for investments in Greece and SE Europe had plunged, as risk aversion hit highs on the back of rising systemic risk.

“During that time, when neither the returns nor our geographical focus could make a compelling investment case, we decided to continue and even accelerate our schedule of roadshows, as Greece was a hot topic.

economic and social aspects during the recession.

Our strong 2013 performance and the Overall Absolute Return Strategy Advisor of the Year Award gives us strength to continue, he continues. “Both achievements confirm that if one persists when times in equity markets are tough with no loss of enthusiasm, results will come. We are a small team at AppleTree, but we all share the same mentality: consistent hard work and a perfect alignment of interests with our investors.

This award was a result of the hard work of the AppleTree team and the trust shown to us by our investors and partners.”

tion and liquidity, Apistoulas says. “Access to the investment team is also of key importance as it enables the communication of our strategy.

Investors value our openness and this is a key element to our success so far. We aim at long standing relationships and transparency is, in our view, one of the most important factors to achieve our goal.”

Name: Dimitris Apistoulas

“Our constant presence and effort to be a reliable source of information during these tough two years, and the confirmation of our conviction regarding a Greek asset rally, increased our goodwill with a significant number of institutional investors. We have managed to turn our physical presence in Greece from a source of perceived disadvantage to an advantage.

In terms of AppleTree Capital’s overriding philosophy when it comes to its clients, Apistoulas says, “For us, investors truly are our partners. We value their trust and cooperation and we feel that on top of our financial expertise they should feel most comfortable with our products. We believe in simple, clear cut, transparent structures when we design our offering. This enables clients to fully understand the purpose and strategy of their investments and also facilitates the full alignment of interests between investors and AppleTree.

We do not believe in complex structures or small print.”

“AppleTree became the local ‘eye’ for a significant number of institutional investors who wanted a local, independent and accurate view on political,

Attractive returns can be achieved with simple, comprehensive structures that above all ensure effective risk management, precision in valua-

Athens 15451, Greece

Email: info@appletree-capital.com Website: www.appletree-capital.com Manager Address: 3rd Floor, DMS Place, 18 Fort St, Georgetown, Grand Cayman Tel: +345 7498 628 Investment Advisor Address: 15 D. Vassileiou Street, Ag. Sophia square, N.Psychico, Tel: +30 211 311 8733

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Software Product of the Year

LexiFi French software firm LexiFi, whose “LexiFi Apropos” program we have named Software Product of the Year, is redefining the way software for financial derivatives is built. LexiFi’s Fanny Colville told us how

LexiFi provides two different products or services: An end-user software, “LexiFi Apropos”: LexiFi’s software is designed to serve as a system of record for non-standard transactions (i.e. OTC derivatives and structured products). LexiFi Apropos brings together all data and services required to develop, market and manage tailored financial solutions. The system supports key business processes, including: pricing, structuring, sales, reporting, client care, trading, portfolio management, risk management and operations.

LexiFi Apropos is targeted typically toward Asset Managers, Private Banks or Risk Departments but also to the sell-side industry.

An embeddable technology, “Instrument Box”: LexiFi has packaged its core technologies into Instrument Box, a component designed to be embedded in new or existing third-party applications.

The Instrument Box is not an application. It is an embeddable component, designed to be integrated into existing applications. The Instrument Box incorporates the most advanced technologies used by LexiFi itself to build LexiFi Apropos. It

makes therefore the MLFi language and associated pricing and analytics technology available to any third-party software.

Instrument Box is therefore typically targeted toward integrators and financial software or service providers.

LexiFi is working with key industry players: investment banks, private banks and other intermediaries and asset management. Moreover LexiFi’s solution enables software vendors and service providers to give a new life to existing applications with full coverage of derivatives and structured products Fanny Colville, Marketing and Sales Senior Executive for the firm, explains how working in alternative investments differs from the more

“

Contrary to a general belief, one of the major technical challenges of alternative investment technology lies in the diversity of products in a portfolio, rather than the individual complexity of products

“

L

exiFi, an innovative French software company, develops innovative financial software combining advanced techniques from Theoretical Computer Science and from Mathematical Finance to redefine the way software for financial derivatives is built. Its award-winning MLFi contract description language precisely captures the terms and conditions of financial contracts, supporting the diversity of derivatives and structured products in a scalable way.

conventional sectors, including the specifics that need taking into consideration.

“Contrary to a general belief, one of the major technical challenges of alternative investment technology lies in the diversity of products in a portfolio rather than in the individual complexity of products,” she begins. “This diversity is measured both in terms of payoff structure and type or combination of underlying assets.

“To overcome this challenge, LexiFi has created MLFi, a domain-specific language to describe financial products in a precise, complete but generic way and implements most operations on top of this formal description. LexiFi considers that such an approach is needed to implement consistently an IBOR (investment book of record) with a sustainable capacity to follow and adapt to future financial innovation.”

There were other challenges too to be taken into consideration, as Fanny continues: “LexiFi has always been focused on developing a disruptive technology that radically simplifies the development of applications for managing tailored financial products. This original formalism for describing financial contracts is the result of a long-term research and development effort that received both industry and academic awards. Focusing on client demands and keeping the technical agility to address some unforeseen need of existing clients in a matter of days seems fundamental to us.

Keeping pace with regulatory changes is considered essential too, nowadays.”

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Colville continues to outline the major successes over the last 12 months which have seen LexiFi stand out among its peers, and the plans the firm has in pace to ensure it remains at the forefront of the alternative investment sector for the coming 12 months.

“After a successful formal launched of Instrument Box, this technology has been praised by market participants of the financial community. During 2013, Bloomberg officially endorsed LexiFi’s cutting-edge technology by licensing Instrument Box for integration into the Bloomberg Terminal.

“With its high agility technology, LexiFi will track all needs or regulatory changes concerning the market participants that our offer may concern.

More than ever, we will promote a solution that addresses in one system as disparate needs as pricing, pre-trade analysis or post-trade end-user documentation and fact-sheet generation. LexiFi will also announce major connectivity solutions with well-established service providers.”

Recently, LexiFi was named Software Product of the Year, as voted by readers of Acquisition International. Fanny describes the elation felt by the firm on receiving this news.

“We received this news with great satisfaction and we see this award as a validation of our work, strategy and particularity. We are very thankful to

“Alternative Investment”, our clients and employees for their trust in LexiFi and our products.”

LexiFi owes its success to its clients continued support and loyalty, and Colville talks about the firm’s overriding philosophy when it comes to providing the best possible service.

“With the insights and experience gained from developing, implementing, maintaining LexiFi Apropos and Instrument Box and listening to client feedbacks, LexiFi delivers customized services to its clients. LexiFi’s experienced consultants provide the comfort of timely software implementations and upgrades that deliver relevant capabilities—which, in turn, enable users to deliver timely and relevant derivative-based solutions.

LexiFi’s clients benefit from an original combination of tools, techniques, and skills to make the most of their investment in LexiFi’s software: • a software development approach that radically simplifies the development of sales support, trading, portfolio management, risk management and processing applications for derivatives and structured products; • an application framework that accommodates the diversity of financial products, business processes, and methodologies; • a repeatable implementation process;

• automated systems to communicate effectively about support and features requests, on an ongoing basis; and above all responsive consultants and engineers with expertise in theoretical and applied computer science, financial products, pre- and post-trade business processes, mathematical finance and risk analysis.”

Name: Fanny Colville Email: fanny.colville@lexifi.com Website: www.lexifi.com Tel: +33 1 47 43 90 00 Address: 49 Rue de Billancourt, F-92100 Boulogne-Billancourt, France

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Transforming Fine Wine Investing More and more wine connoisseurs are now realising the true value of their collections, says Nick Martin, founder of wineowners.com, the online platform for wine traders and collectors that’s changing the markets it serves

O

ver the past decade, managing a portfolio of assets online has become the norm for self-directed investors in equity markets.

As we all know, these self-service platforms allow private clients complete control of their portfolios; transparency of market pricing; trends and supporting information; and gives them direct access to global markets.

Until last year, peer-to-peer fine wine trading was the preserve of professionals. As a consumer you couldn’t store buy and sell directly into the secondary wine market. Collectors had to go through traditional channels such as auction houses and brokers.

Yet there’s an even higher proportion of self-directed wine collectors compared with mainstream asset classes. Why is that? Becoming interested in wine is generally passion-led. The journey very rarely starts with a cold interest in speculation. Yet as soon as the possibility of future appreciation comes into the purchasing equation so does the

role that wine can play in your life as a store of value. That’s how people who love wine become interested in its potential for future appreciation.

So, if you’re interested in fine wine and enjoy consuming it, sharing it and learning about it, it’s a natural place to put a modest proportion of your total wealth. That’s why you might choose wine as supposed to any other pleasure or treasure asset such as watches, cars, art or anything tangibly similar. Because you love it and think you understand it relatively better than many other options available to you.

That’s what Wine Owners sets out to do – to deliver the same degree of market access, transparency and control that high net worth consumers are familiar with in their other hobbies and asset classes.

The essential starting point is being able to catalogue and value a collection online using portfolio management tools. Consumers lack the inventory management systems that trade participants take

for granted, and commonly lose track of exactly what they own and where it’s stored. Portfolio management gives collectors the tools to organise, track performance and take decisions about what they wish to drink, lay down, sell or acquire.

Without the portfolio tools that serve the purpose of inventory management for private clients, it’s much harder to pursue the path of an active collector.

For any self-directed private client price discovery is a precondition. There’s always been an abundance of pricing data online thanks to Wine-Searcher and Google, but making sense of it and finding a reliable market level price – the point at which a wine is likely to find a ready market requires analysis and a lot of data processing.

For a market to thrive, participants must be protected by transparent and safe trading practices, which need to reflect the peculiarities of a market. Fine wine buyers must have the option to inspect condition, check provenance and be permitted to accept or reject matched offers to their

alternativeinvestmentawardstwothousand&fourteen \ fifty three

bids. Assuring the buyer’s position in this unique way may seem odd, but there’s a very good reason for it: one case of wine isn’t indistinguishable from another due to variables such as storage environment, tax status, and packaging.

Portfolio management requires pricing, charting, reviews and scores (the equivalent of analyst reports), drinking dates, producer profiles - everything that self-directed investors take for granted in mainstream investments.

Integrating portfolio management with a peer-topeer trading exchange streamlines an otherwise lengthy process. Selling wine through market intermediaries can be time consuming.

Payment for wine sold through them might take weeks or months to come through. The seller first needs to get quotes, decide what to sell through whom, then has to instruct transfer of the wine to the intermediary for inspection – and only then is it put up for sale. This necessitates repeated

movement of wine in a very short period of time and increases the risk of exposing it to variation in temperature, especially during the warmer months.

when: Demand is globalising; supply is limited; authoritative information exists; and readily-accessible analysis tools bring transparency to a market

By contrast, a decentralised inspection and tracking model streamlines existing market practices: Inspections are carried out in whichever specialist wine storage facility the wine is held, the wine’s condition is protected, and trades can be settled and transfer to the buyer can be completed in a day or so.

All of these preconditions are now in place for the fine wine market.

But does the nature of the market justify this kind of transformation? Wine is the most popular of all treasure assets, with half of all high net worth individuals (based on 2013 research of Spear’s readership) choosing to lay down fine wine.

We know relative scarcity driven by demand underpins collectible markets. Fine wine fits this model due to its comparative liquidity and broadening, global demand base. In summary, a market for treasure assets becomes especially attractive

Nick Martin is founder of UK-based online platform www.wineowners.com, which was specifically developed to meet the needs of wine collectors and traders around the world.

Members catalogue, value and track their fine wine portfolio, and connect with buyers and sellers via a two-way, peer-to-peer exchange.

Today, the core platform and its derivatives manages £300m of fine wines comprising 250,000 cases owned by 10,000 individuals.

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Best Boutique Investment Management Firm, UK & Best UK Equity Market Neutral Fund - Sabre Style Arbitrage Fund

Sabre Fund Management Boutique firm Sabre Fund Management has seen sustainable returns year on year through its Sabre Style Arbitrage Fund.

Managing principal, Melissa Hill told us how

Sabre is an asset class specialist today but has been a pioneer hedge fund manager since 1982.

The firm’s particular strength is in equity style fund management and it manages both systematic and discretionary funds with a market neutral, long/short and variable bias.

Sabre’s highly experienced management has a long track record of success in nurturing and developing investment talent.

Melissa Hill, managing principal, on being prompted to comment on the differences between the hedge fund industry and more conventional asset management, said: “Hedge funds have more degrees of freedom to exploit market opportunities using leverage and short sales to augment the directional returns available to traditional asset managers. True hedge funds are aiming to achieve absolute returns - i.e. returns that are independent of market direction and are not constrained by the need to benchmark to an index.

As an adjunct to an institutional or private individual’s portfolio, absolute return hedge funds can lower overall volatility and improve returns”.

Asked about the challenges and opportunities of running a boutique alternative investment business, Hill commented: “Well you are only as good as your last NAV, so that always keeps the pressure on to perform and to continually look for ways to better what you do. As a boutique, consistent performance is more critical to success

– as is being able to demonstrate a disciplined investment process and strong research and development.”

She added: “but looking at opportunities, by focusing on returns more than asset growth, a fund can be more nimble and take advantage of some market anomalies that are not available to larger firms. The difficult part is getting the balance right – you need enough sales activity and asset growth focus to ensure that you have a sound business but marketing shouldn’t be the tail that wags the dog”.

Hill further commented: “Some of the world’s largest institutions now recognize the quality of returns and the personal client service available from boutique funds and are making efforts to include smaller, niche funds in their portfolios.

This is a great opportunity for firms such as ours to compete for these allocations.”

Reflecting on receiving the best Boutique Investment Management Firm – UK and Best Equity Market Neutral Fund (Sabre Style Arbitrage) Awards, Hill commented: “We are immensely gratified to receive awards for both the business and our flagship market neutral fund. The fund award is a clear endorsement of the hard work and absolute dedication that my partner Dan Jelicic and the investment team at Sabre have committed to providing outstanding investment performance for our clients. The award for the

business recognizes the extraordinary contribution of the operations team who at 1:1 personnel to investment professionals, ensure that as a boutique we adhere to institutional standards”.

When asked about plans for the future growth of the business, Hill said: “There is a growing trend for onshore hedge funds so that retail investors can now invest in strategies that hitherto were the preserve of institutions. Accordingly Sabre is looking to diversify our current offshore fund range with three upcoming UCITS launches, employing our award winning style based strategies. And, for institutional investors, we are looking at offering bespoke versions of our funds. The beauty of systematic investment strategies is that they can be tailored to an investor’s individual requirement”.

Name: Melissa Hill Email: client.relations@sabrefund.com Website: www.sabrefund.com Tel: +44 (0) 20 7592 7870 Address: 46-48 Grosvenor Gardens, London SW1W 0EB

Stability & Flexibility

Reinsurance that stands above the rest

In a competitive environment, we recognise the need for continuous improvement to meet changing demands.

BERMUDA / LONDON / SINGAPORE W W W. H AV E R F O R D B E R M U DA . C O M

HAVERFORD