Emerging manager update More institutional investors have been shifting their focus from larger, established managers to emerging managers. Many studies have shown that emerging managers are more nimble than their larger peers and are able to find alpha where larger funds cannot. An interesting point that should be addressed is the impact AIFMD will have on the ability of European investors to find non-EU-based emerging managers. With the implementation of AIFMD most non-EU- based emerging managers will be unwilling to incur the cost, both monetarily and time-wise, to


Fig.4 Strategies requested in H2 2013 Source: VantagePoint Alternative Investments


register with each individual EU jurisdiction so they can market to European investors. The result is that non-EU investors are able to choose from a larger pool of emerging managers than their European counterparts. For European-based funds of funds this will potentially impact their ability to raise investor capital. For the non-EU-based funds of funds this will potentially increase their ability to raise investor capital. This could also potentially hamper the number of start-up hedge fund launches outside the EU, as there will only be so many day-one investors to whom they will be allowed to market. THFJ


Fig.5 Strategies requested in Jan and Feb 2014 Source: VantagePoint Alternative Investments


Off the cuff


• We’re hearing from certain investors that they are looking at European equities in the belief that in the medium term there are more opportunities there than in US equities.


• We have heard more investors, especially family offices and funds of funds, looking for hedge fund managers to dial up their leverage as they become more comfortable with risk-taking.


• Esoteric asset-backed securities have been a strategy of interest for a number of endowments, foundations, and funds of funds.


Multi-strategy


Event driven


Long/short credit


Macro


Relative value arbitrage


Equity market neutral


Long/short equity


Distressed


Managed futures/CTA


Event driven Long/short credit


Long/short equity


Managed futures/CTA


Multi-strategy


Relative value


arbitrage


Equity market neutral


Macro Distressed


• Investors are willing to accept longer lock- ups in return for opportunities with greater upside.


• Multiple investors have informed us that they are searching for managers in frontier markets.


• Many investors are looking at illiquid strategies in an effort to find performance.


• A large European investor told us they are only seeing one-third of the manager flow that they previously had as a result of AIFMD.


Fig.6 Strategy demand over time Source: VantagePoint Alternative Investments


Fig.7 Investor interest by fund size Source: VantagePoint Alternative Investments


• A prominent long/short equity investor informed us that the bar is quite high for considering new funds given the strong relative performance of their portfolio last year.


• Interest in SMAs has been light for the start of 2014. That said, more investors have been willing to look at smaller funds.


Long/short equity Event driven Multi-strategy Distressed credit


European equity Market neutral Event driven Niche


Structured credit Macro CTAs


Sub $50m 2013 $1bn+ H1 2014 ABOUT THE COMPANY $200m - $1bn H2 2014


VantagePoint Alternative Investments is a boutique third-party fund placement group, focusing exclusively on capital raising for single-strategy hedge funds and private equity funds.


$50m - $200m


• Following a disappointing year for global macro, investors been looking for managers playing in specific niches, as a way to drive upside in the space.


• We are continuing to see an upsurge in investors looking for niche and opportunistic strategies.


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