Ones to watch in... 2015

onestowatchin ... twothousand&fifteen

The Griffon Fund Sole principal and portfolio manager, Ron Baron, shares his strategy for success

Fundana

The Geneva-based independent boutique shares its investment philosophy

Richard Tyler International

An inside look at one of the world’s top sales training and management consulting firms

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contents

onestowatchin hedgefunds

Synthesis (Luxembourg) SA A Luxembourg-domiciled specialised investment fund available to institutional, professional and “well-informed” investors

twothousand& fifteen

The Griffon Fund An alternative investment vehicle designed to maximise returns of managed futures, CTAs and commodity pools

6

Fundana A Geneva-based independent boutique specialising in alternative investments and hedge funds

8

Husic Capital Management A fundamental growth equity investment manager based in San Francisco, California

10

Heisen Global Equity Partners Beijing-based investment advisors providing services through SMAs (separately managed accounts)

12

Capital Support Limited One of the leading technology providers to the alternative investment and professional services markets

13

Laureola Advisors An advisory firm established to offer conservative investors easy access to opportunities in life settlements

14

Old Mutual Global Investors A leading asset management firm which believes alternative UCITS/’liquid alternatives’ create major changes for investors

16

TrueAlpha A currency specialist offering a currency managed accounts scheme for retail and institutional investors

17

FQS Capital Partners An alternative investment specialist that uses cutting-edge mathematical techniques to analyse and invest in hedge funds

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Insparo Asset Management An independent asset management company specialising in frontier markets, particularly in Africa and the Middle East

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Cicero Capital Partners An alternative asset registered investment advisor focusing on specialised niche commercial real estate market strategies

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Beach Horizon A systematic fund manager that trades a portfolio of global commodity, financial and foreign exchange markets

23

Saemor Capital A specialist in quantitative investment management, focused on absolute return generation

24

Sphera Global Healthcare Fund A long-short equity fund focused on investments in the global pharmaceutical and biotech sectors

25

ADG Capital Management A London-based asset manager with clients ranging from large institutions to sophisticated HNW investors

26

Sancus Capital Management A long/short credit fund that focuses on exploiting inefficiencies across North American and European credit markets

27

Sunrise Capital Partners A pioneering alternative asset management firm that is now in its 35th year of investing

28

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EY A global leader in assurance, tax, transaction and advisory services

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Richard Tyler International A Texas-based, world-renowned sales training and management consulting firm

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KPMG A global leader in assurance, tax, transaction and advisory services

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THE GRIFFON FUND

Griffon Fund is an alternative investment vehicle designed to maximise returns of Managed Futures, CTAs and Commodity Pools. We spoke to the fund’s sole principal and portfolio manager, Ron Baron, to find out more

R

on Baron, the Griffon Fund’s sole principal and portfolio manager, has been trading for himself and his family since the late 1980s.

Baron, who throughout his career has always been self-employed and possessed of a strong entrepreneurial streak, started the fund after years of being asked questions about futures trading and being sought for his guidance on investments in the market.

Baron closely monitors the CTAs in which he is invested and changes the portfolio composition frequently. “I add a second layer of alpha to the CTA investment,” he says. “I trade the equity curve of the managers, so that when there’s a drawdown, there are three major possibilities.”

One possibility is to understand that the drawdown is “just part of the game, that every program will have a down period,” and to maintain his investment. A second is to read the loss as a signal of the beginning of the end for a particular product and to head for the exit.

“

In addition to quantitative screens, Baron vets trading advisers for their probity

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The third possibility is to recognise a buying opportunity, perhaps increasing his allocation. Even when he exits a program, Baron leaves himself the option to go back in at a lower price. He says that being able to recognise which scenario is in play and acting on it gives him his competitive edge, adding that the only time this strategy hasn’t worked was when he failed to follow his intuition to exit a CTA whose downturn signalled worse to come.

In structuring his portfolio, Baron says, he brings a perspective informed by many years of experience working with more than 100 CTAs. In his investments, he takes advantage of notional funding, and a main criterion he uses when evaluating a trading adviser is the relationship between its margin usage, its maximum drawdown and its annual return.

“I ask: What’s the real cost? If somebody uses 40% margin and they’ve had a 60% drawdown in the past, and we assume there’s potential for even worse drawdowns, that 60% drawdown and 40% margin usage leaves no room for notional funding. Even in programs with lower drawdowns, you have to allow

a factor of two to three times the current worst drawdown.

“I look for programs that even if you multiply their worst drawdown by two to three times and you add the margin-to-equity, the number still comes out to have a good relation to the return. I’m looking for the greatest value. Someone can have a higher return, but if they use too much margin and are very volatile, then I rule them out.”

Baron strives for diversification across markets and styles in constructing his portfolio. He says he allocates to programs that trade just the equity indexes, programs that are diversified, day traders, long-term trend followers and systematic traders versus discretionary ones. However, he prefers to keep options to a minimum because the risk can be enormous, and he puts a low emphasis on countertrend traders because he has found that not many people have had success with the strategy.

He also watches for the finite window of opportunity in terms of a manager’s track record. Whereas some investors won’t consider a program with less than a three-year track record, he will allocate to emerging CTAs; an adviser with a three-year track record, he says, could be nearing the end of its run.

In addition to quantitative screens, Baron vets trading advisers for their probity, whether they have issues with the National Futures Association or the Commodity Futures Trading Commission, and for how well they recognise their strengths and weaknesses. He monitors them closely to make sure they practice what they have claimed, for example, in use of margin. He watches to see how good are they at risk management and whether they allow large profits to become large losses.

Contact name: Ron Baron Email: ron@griffonfund.com Web: www.griffonfund.com

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FUNDANA

Fundana is a Geneva-based independent boutique which has specialised in alternative investments, and hedge funds in particular, for more than 20 years

F

undana was instrumental in the creation of the first fund of hedge funds of Swiss jurisdiction. Its objectives are to find managers early; to focus on the best; and to manage risks, not just returns. The firm strives to deliver solutions to its clients with a strong emphasis on simplicity, liquidity and transparency.

Today, Fundana is one of the few independent Swiss firms to focus exclusively on hedge funds. Fundana is still managed by its founders with a team of 15 people and total advisory assets are in excess of US$1bn.

It is also involved within the industry by being, for example, a member of AIMA’s research committee.

The majority of the client base is institutional, including pension funds, sovereign wealth funds and charities. Other clients include independent asset managers and family offices as well as large international banks and cantonal banks. Clients come mainly from three regions: continental Europe, the Middle East and Latin America.

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Fundana provides tailor-made solutions for dedicated mandates, through commingled vehicles, segregated accounts, “funds of one” or white labelled products. The firm does not advise on any other asset classes and does not manage any direct hedge funds. Fundana has been the advisor to a long/short equity fund of hedge funds since 1993 as well as a multi-strategy fund of hedge funds since 2003.

These funds have received several industry awards in recent years from Hedge Fund Review, Hedge Fund World and Swiss Banco.

In 2008, the funds advised by Fundana did not have any Madoff exposure, side pockets or suspensions of redemptions and did not impose any gates. In 2011, the largest vehicle advised by Fundana was the only fund of hedge funds rated by Standard & Poor’s to be upgraded to their highest rating, namely Platinum (formerly AAA).

Fundana’s investment philosophy is to focus only on the most liquid hedge fund strategies such as long/

short equity, event driven, global macro and CTAs. The goal is to avoid strategies with undesired “embedded risks” such as leverage, pricing issues, lack of transparency and exaggerated market directionality.

The firm strives to find the right balance between performance, simplicity, transparency and liquidity.

Fundana strongly believes that even if some of the strategies chosen are highly correlated with equity markets, it is an efficient way to optimise an equity allocation by getting equity returns but with significantly reduced volatility and drawdowns. As one of its hedge fund managers commented when asked why you should invest in long/short equity: “Because life is too short to be just long!”

“

The firm strives to find the right balance between performance, simplicity, transparency and liquidity

”

Fundana has a long history and experience in the fund of hedge funds industry, but perhaps the most important lesson it has learned over the years is that “to finish first, you must first finish.” As a result, the firm avoids anything that could cause unrecoverable drawdowns. Thus, it does not invest in strategies which it does not understand, cannot monitor in detail, or which use excessive leverage.

The current environment is ideal for some of the strategies the firm focuses on. For example, in the long/short equity space multiple expansion, high valuations and low single stock dispersion paired with higher volatility provide numerous opportunities, especially on the short side. In the event- driven space, a growing worldwide economy and stable outlook in some regions – particularly in the US – have resulted in more M&A activity, spin-offs and refinancings, generating a great deal of interesting situations. After some challenging years, these strategies seem ripe for excellent performance over the next 18 months. As the French writer Victor Hugo once said, “There is only one thing stronger than all the armies in the world, and that is an idea whose time has come.”

Web: www.fundana.ch

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HUSIC CAPITAL MANAGEMENT

Founded in 1986, Husic Capital Management manages the full capitalisation range of U.S. growth equity strategies, as well as several hedge funds.

We spoke to Frank Husic, Managing Partner, to find out how the firm continues to generate superior returns for its clients

H

usic Capital Management is a fundamental, growth equity investment manager based in San Francisco, California. The firm was founded in 1986 by Frank Husic and has continued to successfully serve institutional and private clients for over 25 years.

Husic Capital Management’s continued success in generating superior returns for its clients has resulted in numerous recent recognitions, including Best Growth Equity Manager – USA from Wealth and Finance International’s 2014 Alternative Investment Awards. They were also recognized in Acquisition International’s 2015 Hedge Fund Awards, with the firm being named Best Growth Equity Investment Manager – California.

“There is no doubt that experience is the most important factor in explaining our success,” says Frank Husic, Managing Partner. “Our strongest skill set is being able to link and integrate the ‘35,000 foot’ thematic view with ‘boots on the ground’ stock selection across industries and sectors. We hope to be among the small number of people who can walk

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“

Experience is the most important factor in explaining our success

”

out of a meeting and see an idea, change or theme emerging that others don’t. Knowledge gained investing in different cycles and industries provides a leg up on analysing current and future opportunities.

The objective is to realise multiples on our investment typically in names not generally known by the investment community. This leads to generating superior rates of return for our clients.”

“We believe that the best investment ideas and the greatest return potential come from thorough independent research and informed judgment,” Husic continues. “As an opportunistic growth manager, we strive to deliver exceptional returns for our clients.

Our investment philosophy is based on fundamental, research-driven, bottom-up stock selection, which has been the cornerstone of our investment process since the firm’s inception.”

Husic believes five factors drive superior returns: early recognition of fundamental or secular changes at the company or industry level that will lead to revenue and earnings growth for our target companies; concentration in the greatest beneficiaries of those

changes; the early identification of future stock market leaders; thematic orientation; and the sale of issues that have reached their potential or no longer exhibit the ability to do so. “By focusing on change, we develop an ‘edge’, or specific insight, into the companies that we select for investment,” he says.

Examples of how this approach has translated into successful returns include investments in Cheniere Energy (LNG), American Airlines (AAL), and the Macau gaming stocks.

“The U.S. Manufacturing Renaissance theme drove our Cheniere Energy investment,” Husic says.

“Driven by the development and implementation of disruptive energy producing fracturing technology, the U.S. has moved toward energy independence.

The abundance of natural gas is one of the outcomes with U.S. prices a fraction of those abroad.

“Though initially built to import liquefied natural gas when natural gas prices were cheaper overseas than in the U.S., Founder and CEO Charif Souki is now adding the infrastructure to export liquefied natural gas from the U.S. now that the pricing differential has reversed. Cheniere is a unique company with experience in these multi-billion dollar infrastructure projects that result in 20-year production contracts.

The value of identifying this management team, gained through our experience, resulted in a successful investment.

“American Airlines is a successful example of our Phoenix Rising from the Ashes theme,” he continues.

“Having simultaneously emerged from bankruptcy and merged with US Airways at the end of 2013, it is now one of the world’s largest airlines. Historically, the industry has been plagued by its poor investment returns. Reeling from a couple of recessions following the September 11 tragedy, the industry

is now consolidating into an oligopoly structure.

By rationalising costs including fleets, routes and labour, American is able to increase fares and profitability. The recent drop in energy prices provides an additional tailwind.

“The Macau gaming stocks including Las Vegas Sands (LVS) and Wynn Resorts (WYNN) are successful plays on our Beneficiaries of the Rise in Consumer Incomes in Emerging Countries theme. On the island of Macau, the Chinese government created an oligopoly for a handful of companies. Despite concerns over the speculative nature of this venture, our experience with gaming stocks and these management teams proved extremely advantageous in the due diligence process.

“Among numerous other successes of ours were United Online (UNTD) and Chaparral Steel (CHAP),” he adds. “We offer a long term track record of superior returns with an unlevered approach to portfolio management and a longer term perspective.”

Husic says he came to California to 1980 when few saw California as the future of the country. “In line with our skill to be early in the anticipation of change, we accurately foresaw the importance of the U.S. West Coast as a driver of growth over the next 50 years. We have the best of both worlds here. We have a great combination of being in a vibrant financial community but not being enveloped by the disease of group think common in places like New York, Chicago and Boston.”

Husic Capital Management is delighted to be included in “2015 Ones to Watch in Hedge Funds” and looks forward to discussing their investment strategies with potential new clients.

Name: Frank Husic Email: frank@husic.com Website: www.husic.com Address: 555 California St., Suite 4925, San Francisco, CA 94104 USA Telephone: +1 415 398 0800 Contact: Tom Boster Email: tboster@husic.com

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HEISEN GLOBAL EQUITY PARTNERS

Heisen Global Equity Partners provide investment advisory service through SMA (separately managed accounts). We spoke to Yi Yu, Heisen Global Equity Partner, about how they help their clients invest in China’s stock market and achieve 50% return per year

O

ur clients include China’s most powerful politicians and industry experts. Working with these individuals allows us to have access to China’s newest policy updates and industry development processes. As a result, we understand the economy better than most people.

When describing the current business environment in our region, we look at four key areas:

1) China is like America in the 70’s. There are plenty of international companies that are based in China, and these companies will become blue chips as well as having their stock value appreciate as time goes by.

2) Chinese local companies do better than many international companies because they know the market better. There are many good local companies that will become very successful, and investing in those stocks will bring tremendous return. Alibaba and Baidu are all examples.

3) There is great growth opportunity for business leaders in 300-500 segmented markets.

4) This generation of Chinese people are smart, creative, and ambitious, and they are bound to outperform many business people from western world.

There is plenty of management talent with great integrity, who will give us the opportunity to make a lot of money as investors.

As for the stock market in China, it is very active right now. In 2014, its trading volume has increased by 10 times (from 50 billion to 500 billion per day)

and the index has rallied by 38%. This has provided us with a great market to make money thanks to sufficient liquidity.

In terms of the hedge fund industry, the emerging trend is that major institutional investors are considering hedge funds as not as valuable as they had expected. This is because many hedge funds are not providing diversification and safety of the commingled fund has become a big challenge.

However in China, hedge funds are becoming more popular as local investors start to pay attention to alpha generation. The biggest development for hedge fund industry in China is that the government has accepted hedge funds as a legitimate business model. Since we can produce great and consistent returns for our investors, our biggest challenge is to maximize our client base and raise enough capital.

“ ”

We are always aware where the money is

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What separates us from our competitors are the following: 1) Experience: Our team has been trading the Chinese stock market ever since it’s built.

2) Network: Our network with the central government ensures that we fully understand China’s macro-economic situation, monetary policy and industry development prospect. We have a better understanding what sector of the country wants to develop the most.

3) Information: We network with the top institutional fund managers so we are always aware where the money is.

4) Emphasis on corporate governance. Once we invest in a company, we are aware of the risks we are taking.

Therefore, we monitor company operation effectively to make sure our investment is well protected.

Company: Heisen Group Inc Name: Yi Yu Email: y.yu@heisengrp.com Address: 15th Fl, Zhongjia Building, Xicheng District, Beijing, China 100051 Tel: +86 185 1077 5880

CAPITAL SUPPORT LIMITED

Founded in 2002, Capital Support has over 12 years’ experience in providing mission critical IT services to the Alternative Investment Market

O

ur high-quality end-to-end services have been developed to meet both operational and regulatory requirements in the professional and financial services sectors.

These core services include: • Managed Services and IT Support (London-based global 24x7 held desk) • Business Continuity and Security • Business Connectivity • Cloud and Local Infrastructure • Hardware and Software Procurement • IT Consultancy and Project Management For the financial services sector, 2014 has seen quite a number of changes following the US SEC roundtable earlier in the year. The Cybersecurity Roundtable increased awareness over potential risks in the industry, and the steps hedge funds should take to protect themselves.

As a result, the US SEC released an examination paper (“Considerations for firms thinking of using third-party technology (off-the-shelf) banking solutions”) highlighting key areas hedge fund managers should take into consideration.

The outcomes were clear: hedge funds can no longer delegate responsibility for their systems and data – they are now accountable and responsible.

Capital Support is considered as one of the “most trusted and respected IT providers” within this space. We have over 180 clients in the alternative investment market spanning three continents (Europe, North America and Middle East) totalling over US$510bn AUM. Our clients look to us to advise on their technology roadmaps, provide innovative solutions and safeguard them from potential threats. As a result of our reputation in the industry, we are investing in ISO27001 to show confidence to our clients and potential clients that we are committed to information security.

At Capital Support, we have three core values: 1. Our People Our people are the face and voice of Capital Support, and it is through our commitment to employing the very best people throughout the organisation that we are able to deliver exceptional services to our customers. We adopt a rigorous approach to building our teams, with a unique recruitment process ensuring that only the strongest candidates are considered for roles within the organisation.

2. Our Expertise We see ourselves as IT Champions for our customers, providing not only reactive support but also proactive guidance on how IT can best meet their developing needs. In order to achieve this we must

be experts not only on the ever-changing IT landscape, but also on the industry sectors in which our customers operate. We recognise the importance of due diligence and our people take it seriously; it’s in our blood.

3. Our Support Our reputation is built around the high levels of service delivered throughout the business, but especially by our Technical Services teams. We’re an IT company that prides itself in delivering excellent services, and that means investing significantly in our people and processes. More than 75% of our staff work in Technical Services, and we are able to provide comprehensive 24/7 support to customers globally.

Name: Carl Chapman Email: info@capitalsupport.com Web: www.capitalsupport.com Address: 3 Harbour Exchange Square, Docklands, London E14 9GE UK Telephone: +44 (0)20 7458 1250 Fax: +44(0)20 7458 1300

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LAUREOLA ADVISORS

Tony Bremness, Managing Director at Laureola Advisors Inc., which is the investment advisor to the life settlements fund Laureola Investment Fund, tells us about recent developments in his sector

L

aureola Advisors was founded in 2013, and is the Investment Advisor to the Laureola Investment Fund, a fund dedicated to life settlements, offering investors a unique combination of growth, tax efficient yield, moderate risk, and zero correlation with traditional investments. The fund will generate positive returns when others do not.

The fund’s investment strategy is to purchase and actively manage a diversified portfolio of life insurance assets, focusing primarily on policies issued by US life insurance companies. These may be acquired directly from policy owners in the secondary market, or from other investors on the tertiary market, depending on market conditions.

The Laureola Investment Fund has been designed for private clients and smaller family offices.

“We are one of the few that seek to profit from the very large dispersion of returns in this opaque and inefficient asset class,” says Tony Bremness, Managing Director, Laureola Advisors Inc. “We have accomplished this by having ‘boots on the ground’ – one principal is focused entirely on sourcing the policies, and over the past 10 years has established the necessary network and reputation to do this successfully.

“Although designed for private clients and smaller family offices, the Laureola Fund has an institutional quality fund structure that can pass the strictest due diligence review.”

For Laureola Advisors, the current business environ-

ment is, says Bremness, extremely healthy. “Investment opportunities are exceptional, due primarily to inability of the asset class to attract much capital, in contrast to the large sums flowing into the popular asset classes such as equities, bonds, and real estate,” he says.

“Developments in technology are positive as they enable smaller players to communicate and engage with investors more efficiently.

“Developments in legislation are mixed, but mostly negative,” Bremness continues. “On the positive side, the last five to ten years has seen much-needed legislation in life settlements to protect less sophisticated sellers, thereby increasing both confidence in the market and transaction volume. But the blizzard of fund manager regulations post-2008 has primarily increased investor costs and made it more difficult to invest in alternative strategies, while failing to protect investors in any meaningful way.”

When working with clients, in addition to achieving measureable results, it’s vital to treat clients with respect, says Bremness. “Generate good performance, offer an attractive yield, and don’t treat the clients as idiots - they’re not,” he says. “If you can’t explain how you generate returns in simple language - you probably don’t understand it yourself!”

When searching for an advisory firm to work with, clients should be looking for a “verifiable track record, and an investment edge that is credible and sustainable,” says Bremness.

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Name: Tony Bremness Email: Tony.Bremness@LaureolaAdvisors.com Web: www.LaureolaAdvisors.com Address: 20 Reid Street, 3rd Floor, Williams House, Hamilton HM11, Bermuda

LAUREOLA INVESTMENT FUND

February 2015

Dedicated to Life Settlements

VALUE OF $1,000 INVESTED (USD)

FUND DETAILS Investment minimum: $100,000 Follow-up Investment: $25,000

$1,500 $1,400

Liquidity: Monthly (90 days notice) Redemption fees years 1-3

$1,300

Administrator: Apex Fund Services Custodian: Bank of Utah Corporate Trust Division

$1,200 $1,100

Valuation Consultant: Lewis & Ellis Auditor: Deloitte

$1,000

Regulator: The Bermuda Monetary Authority

Jan 2013 2014

$ $

2015

$

2016

$

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Year

1.9% 1.0%

6.0% 0.9%

3.0% 0.7%

0.6% 2.4%

3.9% 0.8%

1.9% 5.8%

1.9% 0.6%

3.4% 0.2%

24.8% 18.5%

-

-

-

-

0.4% -0.3%

1.1%

1.7%

1.7%

PERFORMANCE ANALYSIS (USD)

THE INVESTMENT ENVIRONMENT

Current month:

-0.3%

Governments Want More Taxes; Deflation in Europe

Year to Date

-0.3%

Compound Annual Growth Rate Since Inception

24.8%

January marked a volatile month for most markets: the S&P 500 declined 3%, Currencies were also volatile; the GBP moved over 3% and the CHF moved 20% in one day.

Annual Cash Yield

5% to 10%

Worst / Best month:

-0.3% / 6.0%

Fund AUM (USD):

$1.8 ml

47.4%

ISIN: MBG303201088 Regulated by the Bermuda Monetary Authority Registered with the MAS (Singapore) and the FCA (UK)

Equity investors now have something else to add to valuation concerns; Western Governments think companies should be paying more taxes.

Deflation has arrived in Europe. The FT estimates that $3.6 trillion of government bonds now offer negative interest rates; investors are actually paying the government to borrow their money.

In these dysfunctional and volatile markets, many are looking to alternatives for a source of stable return, income, and genuine noncorrelation with the problems that are infecting the traditional markets.

OLD MUTUAL GLOBAL INVESTORS

Old Mutual Global Investors (OMGI) is a leading asset management firm, who believe Alternative UCITS/’Liquid Alternatives’ create major changes for investors

W

e believe hedge fund/’liquid alternative’ strategies, will be of particular interest to Investors approaching and in retirement.

Cash rates are close to zero and investors risk locking into a negative real return so need an alternative with a real return that is expected to be positive.

Strategies which have delivered these positive returns, uncorrelated to traditional assets, with well managed volatility and lower expected drawdowns, will meet the needs of such Investor very well.

We have also seen some notable inflows, from institutional investors, into the fund as a “fixed income replacement” seeking to reduce risk from duration given the very low level of prevailing yields.

We see the development of Alternative UCITS/’Liquid Alternatives’ as a good step for Investors. This is facilitating the ‘democratisation’ of this investment approach which was historically the perquisite of “Rich people and dead rich people” (i.e. High Net Worths and Foundations). Less privileged investors are now able to access this approach.

Assets have grown in the Global Statistical Arbitrage strategy, managed by Paul Simpson, our UK Mid & Small Cap Equity Long/Short strategy, managed by Tim Service, who took over from Ashton Bradbury in Q4., and the UK Opportunities Fund, managed by

We have seen particularly strong demand for our Global Equity Market Neutral strategy (in both UCITS and offshore hedge fund versions), managed by Ian Heslop, Amadeo Alentorn and Mike Servent. This strategy has a correlation of very close to zero so it has been an effective diversifier. The lower volatility version of the strategy, the Old Mutual Global Equity Absolute Return (“GEAR”) UCITS fund, has exceeded its expected returns of Cash +6% (achieving +9.2% in 2014 and +9.2% annualised over the last 3 years, and +8.0% annualised since inception in July 2009) with well managed volatility between 5%-6%, allowing investors to achieve superior risk-adjusted returns compared to those of the more volatile stock market.

Old Mutual Global Investors has been managing Hedge Funds since 2001 and manages >$3.5 Billion in Hedge Funds and ‘Liquid Alternative’ UCITS funds (as at Dec 31 2014). AUM has more than doubled in the last year (from $1.6 Billion as at Dec 31 2013).

“ ”

AUM has more than doubled in the last year

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Simon Murphy and James Bowmaker. These strategies have a history of delivering returns with a low correlation.

A further positive development for Investors is that fee structures are becoming more competitive.

The “2 & 20” fee structure is becoming much less common as Hedge Fund/Alternative UCITS Managers seek to broaden and diversify their investor base.

Many Managers have been willing to lower the Annual Management Fee levels to 1% or lower. It is now also increasingly common for Performance Fees to only be levied only on returns in excess of a Hurdle Rate of e.g. LIBOR. This means that an even greater proportion of the alpha/total return is retained by the end-Investor.

Name: Donald Pepper Address: Old Mutual Global Investors 2 Lambeth Hill, London UK EC4P 4WR Tel: 020 7332 7500 E-mail: clientservices@omglobalinvestors.com Web : www.omglobalinvestors.com

TRUEALPHA

Fernando Barreda was Managing Director and Head of the Proprietary Trading Group at BBVA, but left to establish TrueAlpha Capital back in summer 2012.

We spoke to him on why he set up his own company, with the aim of servicing clients and investors in the idiosyncratic world of FX

T

rueAlpha is exactly what it means. We maintain that attractive, absolute and risk-adjusted returns can be achieved by managing a diversified portfolio across a number of uncorrelated strategies. We believe in a specialist model, and we trade within our own trading strategies. These strategies have a focus on consistent, pure and recurrent alpha generation, severe risk management and capital preservation. As a currency specialist, we provide our clients with a wide range of absolute return FX strategies and exposure to Global FX. What we offer our clients is quite diverse. We are regulated by the regulatory body CNMV of Spain as a Financial Services Firm focused on Financial Advisory and thus we offer our clients a wide range of currency solutions. These solutions include a currency hedge fund called TrueAlpha Global Currency Fund and a Managed Accounts scheme in partnership with SaxoBank of Denmark. We are also immersed in the administrative process of opening a new Hedge Fund in Luxembourg: TrueAlpha FastTrack Fund. Our strategies, always focused on the currency markets, include four FX factors: value, carry, momentum and optionality.

One word we use to describe the world of FX is “idiosyncratic”. FX is the most liquid and effective world market, but it is also the most difficult to exploit. Capturing alpha in FX markets can be a very hard and time consuming job.

As for my background, I was very young when I joined a medium-size regional bank for a short term

internship. They offered me a contract and they were ready to pay for my studies if I decided to turn to finance. Afterwards came Banesto (Santander Group), JP Morgan & BBVA, where I regularly worked within their Global Markets teams in London, New York & Madrid, and specialised in FX and Short Term Interest Rates. After all this experience, I thought it was now time I started my own firm.

Since its inception in 2012, my company has been named Best Hedge Fund in Spain and Best for Uncorrelated Proprietary FX Strategies in Spain in 2014 by Acquisition International Awards. We are also proud to have finished in the Top 10 for eight out of eleven months in 2014 in the Currency Managers Category of BarclayHedge.

Alongside this success has also been some challenges.

Spain is probably not the best place to domicile a HF and size does matter in terms of marketing your fund.

“

We believe in a specialist model

Name: Fernando Barreda Email: info@truealphacapital.com Web: www.truealphacapital.com Address: Torre de Cristal, Paseo de la Castellana, 259 C 20846 Madrid, Spain Tel: +34 911 190 574

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FQS CAPITAL PARTNERS LLP

FQS Capital Partners LLP currently manages the assets of institutions, family offices and high net worth individuals

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QS Capital is an alternative investment specialist with an unrivalled quantitative heritage.

The firm is led by Dr Robert J. Frey, a former managing director at Renaissance Technologies, one of the world’s most successful hedge funds. FQS offers investment solutions that include hedge fund portfolios, advisory mandates, analytical services and bespoke solutions. The firm was founded in 2009 and has offices in New York and London. The firm is regulated in the US and the EU. FQS was born from the Dr Robert Frey family office.

“Dr Frey’s success was built on managing investment risk rather than blindly following returns,” says Pacome Breton, head of portfolio management at FQS Capital Partners LLP. “This founding DNA is fused into all we do rather than being an afterthought. We are somewhat unique in that of first order, managing quantitative and evidential risk considerations to drive the investment selection, supported by Dr Frey’s leadership, who also has a substantial amount of family assets placed with the firm.

“We have a specialism in hedge fund selection and portfolio optimisation using proprietary quantitative and qualitative techniques to identify hedge funds with certain factor and alpha traits, which based on a clients desired investment outcomes are then

blended into a sustainable investment portfolio.

These services are delivered through discretionary (commingled funds/funds of one, etc) and non-discretionary solutions (advisory and analytical services).”

When taking on board a client, it is key to understand what their desired investment outcomes are, says Breton. “We will explain how FQS can achieve these aims using our process and technologies. We understand that a longer-term relationship is best maintained through timely communication and transparency. We also feel it supports the relationship that in so much as a client desires it, we are happy to discuss and share our knowledge of the industry.

“Being spun out from a family office, the firm understands the needs of clients for continuity, stability and that FQS will defend their hard-earned wealth in the same manner as we do our own. Coupled with the significant Frey family investments with the firm, the founder’s long term investment interests are well aligned with that of the firm’s clients.”

Hedge funds are complex instruments at various levels, from the securities and the markets they trade to the people that run these firms. But, says Breton, FQS has found from its years of investing that a key driver in terms of assessing a longer term investment

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in hedge funds, and to a lesser extent fund of funds, is managed AUM growth. “Having a clear understanding how a manager seeks to deal with future AUM growth gives a multilateral understanding of a manager. From the manager’s ability to maintain operational quality over a prolonged period of flat or declining AUM, conversely with escalating AUM growth, if a manager does not control its intake, operational integrity can suffer and the manager may flip from being an active alpha generator to an asset gatherer focused more on maintaining assets and the management fee thereon than working hard for the interests of his clients.”

Name: Keith O’Callaghan Email: info@fqscapital.com Web: www.fqscapital.com Address: 125 Old Broad Street, London, EC2N 1AR UK Tel: 0207 614 9600

INSPARO ASSET MANAGEMENT

Insparo Asset Management is an independent asset management company, specialising in frontier markets, particularly in Africa and the Middle East.

We spoke to them about how their region has evolved and how this affects the investment strategies they offer

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hen Insparo was launched in 2007, by CIO Mohammed Hanif, he saw the potential for growth offered in Africa and the Middle East, while acknowledging there might be challenges in investing in these largely untested markets. Since then, markets in the region have evolved and now offer the liquidity and diversity necessary to support actively managed investment strategies. Healthy balance sheets, good growth and low debt/GDP ratios make African securities attractive to investors looking for alternatives to the more established emerging market investments. In fixed income in particular, African investments can offer double digit yields, with lower volatility and lower correlation to global markets than many emerging market bonds.

Insparo is a boutique specialist firm that invest in frontier markets. The company’s London base provides easy access to the entire African continent and Middle East region, whilst ensuring no inherent regional bias. Insparo’s well-resourced and well-organised corporate infrastructure positions it well in what can at times be complex environments.

Insparo is an active manager, with an emphasis on in-depth, rigorous bottom-up research and top down macro overlay. The investment team make regular research trips to the local markets, during

which they leverage their extensive network of local professionals built over many years of visiting and working in the region.

The region is not without its challenges however, and Insparo’s experienced investment team has been brought together for their specific and complementary skills. The team has an average of 15 years’ experience in investment in Africa and the Middle East and together they offer unrivalled expertise and knowledge of the region.

Insparo’s contacts include senior government officials and economists, prominent business people and

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African investments can offer double digit yields

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entrepreneurs, policy makers, industry experts and local market participants.

The firm offers three strategies investing in fixed income and equities in Africa, the Middle East and the broader Frontier Markets. These can be accessed through commingled funds or as separately managed segregated accounts.

The investment team’s unique combination of experience with knowledge and understanding of these regions is demonstrated by the investment track record since the launch of the company in 2007.

Email: enquiries@insparo.com Web: www.insparo.com Address: 242-246 Marylebone Road, London NW1 6JQ UK Telephone: +44 20 3817 4200

SYNTHESIS (LUXEMBOURG) SA

Synthesis focuses on making investments which allow capital from investors to be transferred efficiently to the companies and individuals who need it, without the expense of traditional intermediaries such as banks

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ynthesis Multi-Asset Architecture SICAV-SIF, SCA is a Luxembourg-domiciled Specialized Investment Fund, incorporated in February 2012, and available to institutional, professional and “well-informed” investors. Synthesis was built upon more than 16 years of extensive research into investment strategies which have, over time, shown themselves to be little, if at all, exposed to the mercy of bond and equity market cycles. We focus on making investments which allow capital from investors to be transferred efficiently to the companies and individuals who need it, without the expense of traditional intermediaries such as banks.

Synthesis seeks as far as possible to avoid exposure to investments where there are «winners» and «losers» to financial transactions, investing instead where we can see real economic benefits being derived. We aim to bring our investors access and transparency in an industry previously dominated by a “closed circle” of financial institutions, with a “back to basics” approach. Synthesis Multi-Asset Architecture SICAV-SIF, SCA currently comprises two Sub-Funds: Synthesis-P2P (“P2P”) and Synthesis Uncorrelated Returns Subfund (S.U.R.F.).

Synthesis-P2P was launched in November 2012, and was the first fund of its type to be established in the EU. The Sub-Fund has achieved an average monthly return of 0.70% since launch, and, after its initial deployment of capital, has produced positive returns for its investors every month since January 2013.

Synthesis has positioned itself at the forefront of the global evolution in P2P/marketplace lending.

Initially seeding the first US-based fund investing in whole consumer loans originated by Lending Club, our portfolio now reflects the increasing diversification of the industry, with exposure to such assets as small business loans, commodity trade finance, accounts receivables and, to a lesser extent, leases on fixed assets. With a rapidly growing number of P2P providers entering the field, it is essential to look “beyond the platforms”, and evaluate the people behind the businesses we invest in. P2P lending is still a fledgling industry; the vast majority of online platforms are “start-ups”, and the right initial selection of partners is paramount to success. Synthesis has acquired the necessary head start, both in terms of research and practical experience, to consolidate and enhance our existing track record.

Synthesis-S.U.R.F. seeks to generate stable annual returns, irrespective of economic conditions, through investing in a unique combination of strategies with low or negative correlation to the equity and bond markets. S.U.R.F.’s core investment strategies are characterized by their predictable cash flows and a “real economy” focus, such as trade finance and commodity trade finance, high cash-flow asset-backed lending, short duration structured credit and non-life ILS, which show relative stability across years and market cycles. We also seek exposure to “custom-built” fixed income instruments, sourced directly by the Synthesis team, offering a combination of attractive yield and strong credit quality.

SYNTHESIS (LUXEMBOURG) SA

allow capital from investors to be transferred efficiently to the companies and individuals who need it, without the expense of traditional intermediaries such as banks. With an aim of enhancing returns, S.U.R.F. has also begun to seek exposure to a carefully chosen blend of “ultra-liquid” (“trading” strategies). Capital representing 30-35approximately 25% of S.U.R.F.’s portfolio will be allocated dynamically to traders selected by Synthesis, all of whom display a successful track record of at least seven years. In many cases, these veteran traders have agreed to offer exclusivity to Synthesis.

We feel that clients should be looking for true innovation, without which few will survive in this highly competitive global environment, and which must be supported by a robust governance, risk management and compliance infrastructure.

Name: Spyros Papadopoulos Email: info@synthesis-sif.lu Web: www.synthesis-sif.lu Tel: +30 694 079 2817 / +44 77 0006 4005

Synthesis focuses on making investments which

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CICERO CAPITAL PARTNERS, LLC

Robert Neighoff, Managing Partner at Cicero Capital Partners, LLC, the alternative asset registered investment advisor, tells us about the firm’s approach to the hedge fund industry

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icero Capital Partners, LLC is an alternative asset registered investment advisor that focuses on specialised niche market strategies in the commercial real estate markets where the potential for reward outweighs risk.

Robert Neighoff, Managing Partner, Cicero Capital Partners, LLC, says he believes the firm’s focus on the commercial real estate securities markets will benefit from an improving domestic economy. “In addition, our particular fund’s focus has limited competition allowing us to only invest during opportunistic entry points into the market,” he says.

“Our experienced portfolio managers have spent their entire careers in commercial real estate and have been through multiple investment cycles,” he says. “We apply this experience to small niche strategies, which focus on preservation of capital and outsized returns.”

Cicero Capital Partners recently announced that its CCP Total Return Fund, managed by Neighoff, was recognised in the 2015 Preqin Global Hedge Fund Report’s Top Performing Funds as the sixth highest performing Credit Management Fund for the three

year period from January 1, 2012 through December 31, 2014. Over that period, the CCP Total Return Fund achieved annualised returns of 16.04%.

Neighoff says the greatest opportunities for investors lie with emerging managers that will be able to take advantage of future volatility in the markets, “as opposed to the established managers who mainly have exposures to overly inflated assets from chasing yield in the low rate environment over the past four years.”

cash flowing investments.”

When working with clients, transparency, says Neighoff, is vital. “Our small manageable strategy means the investor always has access to the portfolio manager and the portfolio composition. We pride ourselves on being able to communicate directly with each investor about our current and future strategy.

We pride ourselves on being able to communicate freely with investors about our portfolio makeup.”

In 2015, the challenge in the hedge fund industry is that the lack of volatility over the past four years has driven assets into the larger investment managers as opposed to emerging managers, Neighoff says.

Advances in technology for the retail consumer have really begun to change the commercial real estate retail markets, he says. “While trends in commercial real estate market are generally positive, pockets of weakness in retail and office properties as well as tertiary markets where consolidation is affecting office supply needs. A strategic approach to selecting investments that eliminate exposure to these pockets of weakness creates a strong portfolio of

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Name: Robert Neighoff Email: bob@cicerocapitalpartners.com Web: www.cicerocapitalpartners.com Address: 8167 Main Street, Suite 205, Ellicott City, MD 21043 USA Tel: +1 443 288 6177

BEACH HORIZON LLP

Beach Horizon has always put research and strategy evolution at the core of what it does, aiming to increase an understanding of markets and trading system behaviour and feed this back into the strategy through enhanced models

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ctober 2013 marks a milestone for the London-based systematic quantitative manager Beach Horizon LLP, which was founded in 2004 by three Partners with a well-established fund management pedigree: David Beach, Sanjeev Lakhanpal and Dr. Paul Netherwood.

The latest research milestone is significant because it includes a unique proprietary pattern recognition methodology which was the culmination of years of research.

The methodology is the automation of the pattern recognition approach developed by David Beach.

Prior to Beach Horizon, David ran the Beach Capital Management Discretionary Programme and had a track record annualising a +20% average for 17 years. Although systematic and rule based, patterns were identified visually by David rather than by machine. The automation of his approach by the team at Beach Horizon is a significant achievement.

Pattern recognition is now combined with Beach Horizon’s robust Digital Signal Processing (‘DSP’) trend following methodology. The DSP approach leverages off a large body of scientific and engineering knowledge for the analysis of signal data.

The blend of DSP, a linear approach, with the non-linear style of patterns benefits the Programme during range-bound markets and at points of inflexion, and is particularly well-suited to poor market conditions for traditional trend following.

The combination of the use of rigorous scientific methodology combined with the automation of trader experience creates a robust model that adapts to varying trading conditions. The two methodologies are unique to Beach Horizon.

Changes to the Programme have reduced its correlation to the Newedge Trend Index over the past 12 months – more significantly there has been no correlation to the Newedge Trend Index during down days over the same period.

While Beach Horizon has stayed true to its fundamental tenets of diversification, a meaningful exposure to commodities and a trend-capture approach, a number of other enhancements were scaled into the Programme through 2013.

Beach Horizon today with firm assets over US$100m and a long-standing team of seasoned professionals is ready for growth benefiting from past experience and capability to run much larger AUM.

The enhancement of Beach Horizon’s portfolio weighting methodology has resulted in making the portfolio more adaptive and more dynamic in finding markets that are much better diversifiers for a given market environment.

“

The latest research milestone is significant

Goals for the firm are performance-related whilst remaining as committed as ever to enhance the proprietary strategies and Programme.

Email: marketing@beachhorizon.com Web address: www.beachhorizon.com Address: Beach Horizon LLP 4 Chiswell Street London EC1Y 4UP UK Tel: +44 020 7382 2460

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SAEMOR CAPITAL

Saemor Capital is a specialist in quantitative investment management, focused on absolute return generation

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ell us a little about Saemor Capital.

Saemor Capital is a specialist in quantitative investment management and was founded in 2008 with the backing of insurance company AEGON. We manage a market-neutral fund investing in European equities. In addition to the AI Award, the fund also won three awards in 2012 (Hedgeweek, HFMWeek and Hedge Fund Review).

With approximately US$600m (â‚Ź500m) under management, we are the second largest hedge fund manager in the Netherlands. The manager is AIFMD-regulated and eligible to passport its distribution activities in the main countries in Europe.

Saemor Capital has a stable culture with a particular eye for innovation. Our DNA is that we are equity investors by nature, not rocket scientists who made a career change into finance. We construct models that do make sense from a statistical and fundamental perspective. Combining a disciplined, process-driven investment philosophy with theoretic insights and creativity allows us to differentiate ourselves.

How would you describe the current business environment in your region?

We expect 2015 to be a year of increasing volatility in European equity markets. Geopolitical uncertainties, the Grexit debate, central bank policies, pronounced dollar strength and oil price weakness may

impact risk appetite. Countries with high debt levels and lacklustre growth will come under pressure. As such we prefer higher quality companies with exposure to North America and domestic Europe.

Which sectors in your universe offer good opportunities for investors?

The evidence of a turn in Eurozone’s business cycle is building. During December we have reduced the exposure in defensive stocks and increased the weight of cyclicals and value stocks. Defensive stocks have been bid up in 2014, but with our multi-factor model approach we are still able to select quality companies with good earnings momentum at reasonable valuations. Within European equity markets this currently leads us to health care, automobiles, media, IT and telecom stocks. Additionally we also have long positions in a number of banks where we see the benefits of a lower interest rate environment finally kicking in.

employ robust risk management. The individual stocks are selected using quantitative models. We are ardent believers that quantitative stock rating processes deliver more objective results and that they limit behavioural biases that can hinder buy and sell decisions.

How does your business stand out in your field?

Many investors are looking for investments which behave differently from the market, so that if the market goes down they have sources of return in their portfolios which are not dependent on the market’s direction. Market movements have very limited impact on our results. In addition, Saemor has demonstrated very limited correlation with other managers who manage market neutral strategies.

How would you describe your investment process and philosophy?

Saemor employs a highly disciplined approach to investing in liquid European equities. By design, our fund is market neutral, so that market movements have a very limited effect on our investment results.

Despite the increased volatility of geopolitical events and the abrupt fall in the price of oil, we have been able to generate strong returns for our investors.

We do this by creating an approximately 50/50 balance between long and short positions and we

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Web: www.saemor.com

SPHERA GLOBAL HEALTHCARE FUND

Sphera Global Healthcare Fund is a long-short equity fund focused on investments in the global pharmaceutical and biotech sectors

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ver the years, the Tel Aviv-based Sphera Global Healthcare Fund has built a strong team of eight investment professionals – including three PhDs and two MDs. The team combines over 100 years of industry experience.

“The fund aims to provide investors with superior risk adjusted returns through high quality, directional equity exposure with moderate volatility,” says Doron Breen, Managing Partner.

Sphera’s focus on scientific and clinical expertise differentiates it from other funds, says Breen. “The fund manager’s location in Israel provides for a distinct and unique angle in assessing global opportunities in pharma and biotech – as Israel is a major untapped research hub for these industries.”

The current business environment is defined by major R&D achievements in the pharma industry, led by breakthroughs in innovation, which are creating tremendous value in the sector, says Breen. “Consolidation will accelerate, driven by major cash flows and synergies.”

Breen feels that strong fundamentals, combined with major R&D achievements, will create multiple

winners and losers allowing for significant stock picking opportunities in the pharma and biotech sectors. “Innovation and consolidation are the main investment themes.”

Opportunities in the healthcare sector are supported by three distinct developments that have occurred over the past few years, says Breen: increased demand for drugs – driven by extension

“

Sphera’s focus on scientific and clinical expertise differentiates it from other funds

of life expectancy and increased consumption in emerging markets; major R&D achievements, led by breakthroughs in innovation – the maturing of new technologies has created a significant flow of new breakthrough drugs that will be launched in the coming years; and an accelerated consolidation process – motivated by significant free cash flow and a need to acquire growth will create significant value. “These mega-trends will create multiple winners and losers allowing for significant stock-picking opportunities,” he says.

Name: Diana Kurkovski Email: Diana@Spherafund.com Web: www.spherafund.com

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ADG CAPITAL MANAGEMENT Hasan Abdat, head of ADG Capital Management, tells us about his firm and its approach

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DG Capital Management is a London based asset manager. We manage the ADG Systematic Macro program in both fund and managed account formats. Our clients range from large institutions to sophisticated HNW investors.

rates, currency exchange rates and asset prices.

Investors should expect to benefit from strategies taking a big picture view.

Today’s business environment

The biggest changes that have occurred over the last few years and continued in 2014 is the increasing legislative burden placed on fund managers, particularly those wanting to market to European investors.

The result is the heightened barriers to entry for new entrants. This reduces competition in the industry, which adversely affects the price to quality ratio of products available to investors. This is a shame, as this industry has been historically a magnet for the best talent.

The business environment is certainly improving.

Appetite for macro and CTA strategies is returning, especially after a year when they showed the value they can bring to investors’ portfolios. We have seen an increase in interest in our approach and have good reasons to anticipate the continual growth of our business. On the regulatory front, after years of reforms and changes, we are beginning to see the pace of that change slowing (but by no means disappearing). The legacy of those changes however is undoubtedly a higher barrier to entry and increased cost of regulation and compliance.

We are fortunate at ADG Capital, being part of a bigger group gives us access to an IT, operations and compliance resource of institutional quality. This puts us on par with our longer established peers and helps us to confidently meet the increasing demands of clients and regulators alike.

A systematic approach ADG Capital Management is a systematic macro manager. We use macroeconomic and other fundamental data to determine the outlook for broad asset classes and individual markets. What we do not do is position our portfolios based on a discretionary outlook for global markets nor do we try to determine which sectors or styles are likely to outperform going forward. I would add however that in the current environment divergence between economic developments in different parts of the world is likely. This will reflect in diverging interest

Hedge funds today

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Our strategy uniquely builds on a number of well-studied fundamental relationships

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Pleasing performance Our performance has been very pleasing since launch placing us close to the top of the universe (Performance of the ADG Systematic Macro Fund from its launch in 2013 to end November 2014 has been an annualised return of 17.4% and a Sharpe Ratio of 2.17, net of fees). We have also raised some assets with our AUM standing at about US$130m.

Our strategy uniquely builds on a number of well-studied fundamental relationships that we exploit in a systematic and unemotional manner.

Serving clients We stress over and over to our clients and that they should not just be looking at our performance alone.

Of course it is important to deliver target returns but it is also important how we fit into their overall portfolio. We know through the analysis that we have carried out and that has been carried out by independent third parties that our return patters show very low correlation to other managers, strategies and broad market indices. That means we deliver not only positive returns but protection to our clients when it is needed.

Name: Hasan Abdat Email: habdat@adgcapital.co.uk Address: 10 Chiswell Street, London EC1Y 4UQ Tel: +44 20 7856 1628

SANCUS CAPITAL MANAGEMENT

Shelly Baldwin, Head of Business Development at Sancus Capital Management in New York, gives us an overview of the firm and its fund

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ancus is a long/short credit fund that focuses on exploiting inefficiencies across North American and European credit markets. The fund invests in event-driven and floating rate credit opportunities by using a wide array of credit products, including high yield bonds, CDS and CLOs. The fund uses a nimble and differentiated approach to investing that combines fundamental analysis, momentum trading and a relative value framework.

Further, it uses an analysis to identify attractive arbitrage and directional opportunities, while attempting to exploit inefficiencies created by the bifurcated nature of the credit universe resulting in similar risks being valued differently by market players. Sancus targets asymmetric return profiles by combining various credit instruments with the aim of generating option like payoffs that limit downside exposure. The fund specialises in instruments that have embedded complexity premiums, such as CLOs and synthetic tranches.

has the advantage of using more complex instruments to express fundamental credit views while some competitors might be relying only on a qualitative approach to analyse structured investments.

“The smaller size of the fund facilitates a dynamic and quick re-allocation between event-driven, fundamental investments and structured products allowing the fund to take advantage of shorter-term market disruptions in the credit markets.”

Sancus seeks pockets of value created by regulatory and macro changes, such as Dodd-Frank, the Volcker Rule and shrinking global banking balance sheets, says Baldwin. “The main regulatory framework currently affecting CLOs is the risk retention rule which will take effect in 2016 and will require managers to retain for at least two years a portion of every CLO they issue. This regulation will restrict the numbers of deals that managers can issue and will effect capitalization requirements and company structure.

Sancus employs a strategy which focuses on identifying mispricings and attractive opportunities by monitoring various parts of the credit space, says Shelly Baldwin, Head of Business Development.

“While many credit funds focus on one particular area, such as distressed, converts, or structured products, Sancus feels it has a competitive advantage by looking more broadly and finding relative value misprissings. The fund’s investment philosophy is a by-product of our founder’s unique investment background. Ms. Chernova started by trading fundamental high yield and then moved to more macro credit products such as synthetic indices and tranches.

“Analysts fear that the regulatory environment will drive down CLO issuance. However, in an effort to front-run the regulatory changes, CLO issuers printed a record amount of paper in 2014, which caused CLO spreads to widen across the capital structure.

Although we expect most managers to successfully transition to accommodate the risk retention rule, the equity of noncompliant deals may be penalized to the extent that such transactions may not be able to refinance past the implementation date. When investing in CLOs, it is essential to select managers whose business continuity plans allow for ready adjustment to the new regulatory framework.”

“Accordingly, Sancus has developed a unique approach which marries fundamental analysis with the use of structured products. The resulting blend often

Over the past few years, the hedge fund industry has seen many regulatory changes, says Baldwin.

“Hedge Funds have been mandated to register with

different regulators such as the SEC or CFTC and, in the coming years, this trend of will continue in foreign jurisdictions. Investors continue to become more sophisticated and discerning. Additionally, investors expect from funds more standardised information; this creates more transparency, a trend that we also expect will continue.

“We think the biggest risk for 2015 is global deflation,” she continues. “The key threats to the US economy come from Russian, Chinese and European deflation being exported to the United States. A strong dollar may further hurt exports. Meanwhile, though the decline in oil prices will certainly offer stimulus and excess cash flow to consumers and countries that import oil, supporting central banks around the world should offer counter balance and extra liquidity to the markets. These stimuli should counterbalance deflationary pressures.”

Name: Shelly Baldwin Email: shelly.baldwin@sancuscap.com Web: www.sancuscap.com Address: 1325 Avenue of the Americas, 27th Floor, New York, NY 10019 USA Tel: +1 212 277 8256

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SUNRISE CAPITAL PARTNERS

Jason S. Gerlach, CEO and Managing Partner, Sunrise Capital Partners, tells us about his firm and gives us his thoughts on the current hedge fund landscape

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unrise is a pioneering alternative asset management firm that will complete its 35th year of investing in 2014. Founded in 1980, Sunrise has generated over $1 billion in wealth for its investors since inception and it continues to offer a range of compelling investment programs for individual and institutional investors alike in the form of on and offshore fund vehicles (for qualified investors), separately managed accounts, and an actively managed ETF (www.SunriseETF.com). RIAs and qualified institutional investors may review detailed information on Sunrise’s offerings via the Financial Diligence Network at www.gofdn.com/sunrisecapital.

Jason S. Gerlach, CEO and Managing Partner, believes that Sunrise stands out in the crowded hedge fund/ alternative asset management industry in several ways. “First, we bring to the table a level of experience that is matched by very few of our competitors.

Having run our flagship strategy since 1980 and having origins that go back even further, we bring to bear for our investors a team and an investment approach that has been tested repeatedly in almost every type of investment environment.

“Secondly, through our innovative investment approach we bring to investors truly diversifying solutions that are designed to, over time, drive down overall portfolio volatility and increase overall portfolio returns. This is particularly important in periods of economic downturn and crisis such as we saw in 1987, the early 200’s, 2008, and even Q3 2011.

“Lastly, having worked with investors since 1980, Sunrise has developed an incredibly customer-friendly, hands-on approach to client relations that treats all of our investors like family and ensures

that they get the best possible service from our team at all times. For these reasons, and others, we are confident that the Sunrise opportunity is one of the most compelling in the hedge fund/alternative asset management industry.”

The environment for innovative alternative asset management firms such as Sunrise has never been better, says Gerlach. “More and more investors everyday are realizing the importance of better diversifying their portfolios with multi-faceted, tactical strategies such as those of Sunrise. And thanks to technological innovation and regulatory evolution, it is easier than ever for Sunrise to deliver its invest-

“

We bring to the table a level of experience that is matched by very few of our competitors

”

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ment acumen to a broad range of investors ranging from individuals to the world’s largest institutions.”

Investment activity has picked up substantially across all sectors in 2014, as governments in many instances have scaled back interventionist policies and allowed volatility to return to global markets, says Gerlach. “This has proven to be quite favourable to investment strategies such as those of Sunrise. Looking forward, Sunrise believes the greatest opportunities for investors lie in building out broader-reaching portfolios that diversify by sector, market, geography, time and assumption.

Ultimately, 35 years of investing has taught us that it is only well-diversified portfolios that will withstand the vagaries of market behaviour over the long term. Today thankfully, it is easier for investors to build their own, well-diversified portfolios than ever before and Sunrise stands ready to help any investor in achieving this important goal.”

Name: Jason S. Gerlach, CEO and Managing Partner Email: jgerlach@sunrisecapital.com Web: www.sunrisecapital.com Address: 12544 High Bluff Drive, Suite 400, San Diego, CA 92130 USA Telephone: +1 877 456 8911

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ERNST & YOUNG LLP

Gregory E. Wolski, CPA is a Partner and Global Practice Leader for the Transaction Forensics practice at EY

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rnst & Young LLP (“EY”) is a global leader in assurance, tax, transaction and advisory services. Transaction Forensics, part of EY’s Fraud Investigation & Dispute Services (“FIDS”) practice, provides due diligence services relating to anti–corruption and other forensic issues, as well as services in connection with disputes and investigations stemming from proposed or completed mergers or acquisitions. These services include assisting companies in pre-closing contractual language assessments and pre-arbitration dispute analysis, as well as post-acquisition assistance with preparation of accounting mechanisms and post-closing arbitration and dispute services.

Mr. Wolski addresses the current business environment. “Buyers in today’s robust M&A environment face heavy competition. Deal fundamentals are strong and the M&A deal pipeline is expected to continue to increase sharply. However, buyers must continue to be particularly cautious about safeguarding their reputation. Buyers have become increasingly aware that they could become subject to bribery (and other compliance related) allegations at the entity level as well as individually. Many buyers are actively addressing compliance risks through pre-acquisition due diligence as well as post-closing through ongoing compliance monitoring.”

Mr. Wolski adds: “Moreover, buyers recognize that in spite of the parties’ best intentions, nearly onethird of all closed transactions end with a dispute. In addition, most transactions that don’t end in a dispute require significant post-close efforts and negotiations between the parties to achieve desired results. Further, the likelihood of significant post-close negotiation tends to be heightened with cross-border transac-

tions. Buyers are actively managing such risks through pre-contractual language assessments and pre-arbitration dispute analysis. Our pre-contractual language assessments and pre-arbitration dispute analysis provide buyers with greater insight into their ability to achieve the intended results of a transaction.”

Mr. Wolski tells us more about the firm and what makes it stand out from its peers. “Our team couples deep anti-corruption and due diligence experience with global capabilities and resources.

When focusing on potential issues with cross-border transactions, our global teams provide knowledge of local business culture, language, and geographically distinct areas of heightened compliance risk.

Additionally, our solutions are tailored to industry and geography specific risks to assist an acquirer in its management of compliance based risks. Our

“

We couple deep anti-corruption and due diligence experience with global capabilities

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professionals work with our clients and their legal advisors to bring them the benefit of broad sector experience, deep subject matter knowledge, and the latest insights from our work worldwide.”

With regard to the future, Mr. Wolski continues: “Regulators in the United States remain committed to the enforcement of compliance related laws across a wide range of industries, In 2014, Foreign Corrupt Practices Act (FCPA) enforcement actions alone resulted in total corporate penalties of approximately $1.6 billion, with average corporate fines and penalties of $156.6 million, the highest average on record.

The recent trend of significant corporate penalties is expected to continue in 2015. We anticipate that our FIDS practice, currently comprised of over 3,100 professionals in 67 countries, will continue to grow rapidly to assist our clients with satisfying significant regulatory obligations across industries and geographies as well as with the complex risks associated with our clients’ contemplated transactions.”

Name: Gregory E. Wolski, Partner Company: Ernst & Young LLP – Fraud Investigation & Dispute Services Tel: +1 312 879 3383 Email: gregory.wolski@ey.com Web: www.ey.com/us/fids

RICHARD TYLER INTERNATIONAL Richard Tyler International, which is based in the USA in Houston, Texas, offers customised training programs on a range of topics vital to business success

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ichard Tyler International, Inc. ® which is based in Houston, Texas, is one of the world’s top sales training and management consulting firms, with 25 years’ work throughout the globe.

The company is headed by Richard Tyler, a highly acclaimed speaker and best selling author who has been called “the world’s top sales trainer and management consultant”.

Richard was selected as one of America’s PremierExperts™ and his philosophies have been seen in Forbes magazine, Entrepreneur magazine, The Business Journals, Sales and Marketing Management magazine, Wealth & Finance International magazine, Acquisition International magazine, the Houston Chronicle as well as in hundreds of articles and interviews. Richard has been seen on FOX, CBS, NBC and ABC television affiliates as well as other major online media outlets, including Yahoo!Finance, CNBC.com, Bloomberg Businessweek, Reuters, MarketWatch and many others.

Richard Tyler has authored 12 books and has three new books due out in 2015. Richard Tyler has also recently joined a select group of entrepreneurs from around the world, along with international best-selling author and keynote speaker Mark Victor Hansen (Chicken Soup for the Soul), to co-write the forthcoming book titled, Boom!: The World’s Leading Entrepreneurs and Professionals Reveal Their Secrets to Improving Your Health, Wealth and Lifestyle Through Their Explosive Techniques.

Richard Tyler teaches philosophies and techniques in a number of areas vital to success in any business, including sales, leadership, management, customer service, marketing and quality improvement.

In addition to consulting services, Richard Tyler International offers two key training programmes which instil skills and philosophies vital to business success.

The first of these training programmes is the Commitment to Excellence® Sales Immersion™ Programme.

Recognised as “The World’s Best Sales Training™”, this programme is designed for the serious sales professional. It’s an intense, six-day sales training seminar for those committed to their career, and is specifically designed for those who refuse to accept nothing but the best.

It’s open to anyone, even those without a sales background. But, for course participants, one thing is essential: a willingness to work hard. And it’s worth the effort: the Commitment to Excellence Sales Immersion Program teaches participants to close the big sales, overcome the toughest sales objections, work at multiple levels of an organization from the front lines all the way to the CEO, define and deliver the right message, significantly reduce the sales cycle, effectively handle the competition and much more.

It is a programme that clearly yields results – as one participant says, “As a veteran of numerous sales seminars and courses, I can tell you Richard Tyler’s sales course is by far the best!”

Richard Tyler International’s second key training course is the Leadership Mastery™ programme.

As well as growing revenue and profits, developing future leaders is one of the greatest challenges that all organisations face today. Companies that invest

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It is a programme that clearly yields results

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in the development of a “Revenue Generation and Profit Generation” mindset for all their people as well as the development of leadership and management talent gain a competitive edge demonstrated in sustained growth and profitability.

This is what the Richard Tyler International Leadership Mastery Programme sets out to deliver. It is an intense, five-day training seminar for the professional who wants immediate results.

Tyler teaches his “16 Characteristics of Excellent Leaders and Managers” – factors that companies must learn to assess. The programme helps participants identify their leadership qualities, uncover their mind-sets and create a detailed development plan for their future to achieve significant leadership results. Furthermore, participants will also learn how to unleash the power and potential of people by gaining insight into Tyler’s “The 10 Principles of Supervision” and the “7 Basic Needs” of all employees.

It all may seem very complex – and it certainly adds up to a lot of hard work. But it’s always worth remembering that, as Tyler himself says, “Your success tomorrow is in direct proportion to your ‘Commitment to Excellence®’ today.”™

Address: Richard Tyler International, Inc.® 5773 Woodway Dr., Suite 860 Houston, TX 77057-1501 USA Tel: (+1) 713 974 7214 Web: www.RichardTyler.com Web: www.SalesImmersion.com

risingstarsintax twothousand& fifteen

KPMG Ayhan Ustun is a Partner in the tax practice of KPMG in Turkey. Ayhan has been leading the tax advisory group (including M&A tax and international tax services) since 2010. Here, he gives us an overview of his firm and the current tax landscape in Turkey

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s the tax advisory team at KPMG, we have a team of 24 FTE professionals (including two partners and two directors) who are all dedicated to M&A tax and international tax services.

The team also has industry focus on energy, financial sector and private equity investments. The key people in the team (partners, directors and managers) have been working together for a relatively long time and are well positioned to develop and share knowledge for the benefits of our clients and our firm. The approach of our team is to position ourselves as a business advisor to our clients where we use tax knowledge as a tool to create value.

When searching for a firm in the tax sector with which to work, clients should seek a service provider who has a depth of expertise not only on the technical tax matters, but also in the specific field of activity (e.g. M&A or group reorganisation) as well as the relevant sector. Also, an effective service provider has to be comprised of a balanced mixed of professionals who can work as a team and back up each other in case of urgency or large scale projects.

Turkey’s tax landscape The enactment of the new commercial law (effective from 2012) and the introduction of more standard accounting and auditing standards in the new law was a major movement with the aim to have Turkish companies produce more reliable and comparable financial information. But the implementation of this practice was rather slow, and currently only large companies who exceed certain thresholds are subject to this requirement. Other companies still continue to produce their financial information for tax purposes only.

The ratio of unrecorded economy is still relatively high and the Turkish government cannot effectively

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The Turkish tax system relies heavily on indirect taxes, such as VAT, customs and special consumption taxes.

This creates an inequality in sharing of the tax burden amongst society

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collect taxes on income (of individuals and corporations). Therefore, the Turkish tax system relies heavily on indirect taxes, such as VAT, customs and special consumption taxes. This creates an inequality in sharing of the tax burden amongst society.

The Turkish tax authorities have been aggressive on transfer pricing policies of multinational companies.

Although “advance pricing agreements” are available for multinational companies it has been applied widely up to now. Therefore both new investors and existing companies in Turkey are in the process of reviewing their transfer pricing policies.

Also, the Turkish tax authorities have been challenging management fee type of payments by the Turkish subsidiaries of multinational companies and trying to either characterise them as payment against knowhow (royalty) and levy withholding tax or deny the tax deductibility of those payments with the argument that there is no actual services performed for the benefit of the Turkish business. This still represents a major dispute area since the approach of the Turkish tax authorities to certain extent override the double tax treaty provisions in this case.

Name: Ayhan Üstün Email: ayhanustun@kpmg.com Web: www.kpmg.com Address: Kavacık Rüzgarlı Bahçe Mah. Kavak Sok.No:29 Beykoz, Istanbul Turkey KPMG’s tax advisory group in Turkey

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