Hedge Fund Symposium
Search for shared values in the hedge fund industry In terms of shared sustainable values, what do the Eurocrisis, downwarding trends in indices, business models, performance, investing and regulation have in common? Sustainability is an important topic for the hedge fund industry. Just a couple of years after the Credit Crunch the Eurocrisis hits the industry hard. Staying alive is the central theme. However, each crisis offers opportunities.
Roelof Salomons, Chief Executive Officer Pelargos Capital
Sustainability: get it right from the start
‘Sustainability means strong governance, a sound investment philosophy and organisational stability. Hedge fund benefits are in decline and they offer less downside protection. But they still beat traditional asset classes. Traditional and hedge fund models will merge. Their scale is important and there will be a lot of mergers & acquisitions. A sustainable hedge fund manages at least USD 100mln per fund and ticks all operational and regulatory boxes.’
Marc de Kloe, Alternative Investments Manager ABN AMRO Private Banking
Building a sustainable Hedge Fund Platform & Offering
‘Hedge funds post 2008 are still the darling of investors, but more selectively so. Clients demand good and almost guaranteed liquidity, transparency, due diligence and independent controls. The standard fund of funds business model is under huge pressure. UCITS represents a replacement for the disappointing FoF industry in Europe. Given the pressure on performance and variation of returns of individual manager’s, manager selection and active management will be crucial to the performance.’
Dan Thompson, Senior Manager Hedge Fund Group Ernst & Young London
Ernst & Young’s Global Hedge Fund Survey: important outcomes
‘Hedge funds appear to underestimate the importance of a clear succession strategy to investors. Moreover, hedge funds also believe that investors’ loyalty lies with the founders, even though the primary focus of investors is on the continuity of individual portfolio managers. Managers and investors agree that independence is important for good governance, but investors are less confident in the effectiveness of boards. Eighty percent of investors believe that boards are not empowered to challenge decisions of management. As for the future, regulatory uncertainty is a key concern.’
Anastasia Critides, Executive director Morgan Stanley London
Capital introductions: it has never been easy to raise capital
‘Concerning performance we are getting into negative territory. Still, 45% of investors say they expect to raise their allocations to hedge funds. This is one of the findings of the Morgan Stanley Global Investor Survey. Is this the toughest time to raise capital? It has never been easy. It is a fact that people are currently holding a lot of cash, some even more than ten percent. We expect that the end of this year will bring a lot of movement.’
Bas Nagtzaam, Managing Partner QTR Invest
Capturing market inefficiencies as a roadmap to sustainable growth
‘We started a small hedge fund with only 300K in assets under management and have grown our assets to 5 million euros in two years. It is our mission to become a leading and innovative hedge fund manager and quantitative trading research center. The essence of what we do is capturing market inefficiencies in cross-border relationships between the stock trading markets in Asia, Europe and the US. Within our fund, automated high-frequency trading systems are employed. By taking advantage of the inefficiencies in the market, these systems are able to make profits under various market conditions. We have approximately one roundturn of our fund assets per day.’
Sophie Robé and Didy van der Schilden, Alternatives4Cildren
Successful in providing long lasting alternatives to children in need
‘We raise funds by organizing networking events in the Netherlands involving participants of the alternative investments industry and their investors. Last year we raised more than 80,000 euros for our projects, after costs. We funded two sustainable projects with this money: a primary school in Timbuktu in Mali and a school for children in the slums of Bangalore in India. These results show the strength of the Dutch hedge fund community.’
Ton Daniëls, partner Ernst & Young Tax-Asset Management
Focus on FATCA
‘The Foreign Account Tax Compliance Act (FATCA) introduces a number of new compliance requirements for the financial services industry in the context of the G20’s action plan against tax evasion. FATCA is a 30 percent withholding tax per 1 January 2014 to be withheld by US Financial Institutions. To avoid this 30 percent FATCA withholding, a FFI must enter an agreement with the IRS (the US government agency responsible for tax collection and tax law enforcement) and perform a number of tasks. One of its weaknesses is the ability to withhold and pay the IRS 30 percent on “pass-tru payments” made to recalcitrant account holders and non-participating FFIs.’
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