Building better funds for today’s environment

This month we examine the past month’s alternative news and our guest writers look at ways to build better funds for today’s environment.

October was a tricky month for hedge funds, with RV the only strategy in the green. There were some decent fundraisings in secondaries and in venture capital. Millennium has been prepping for the future, adding capital, looking at future partnerships, and even looking to launch its first new fund in three decades. Quarterly numbers show strong performances and significant inflows amongst the big brand PE players. We also are entering a new era of super deals with KKR/ ECP and Mubadala/ Seviora. The endowment alternative allocations have been underperforming US equities, while Preqin is forecasting a $30tn global alts world by 2030. And in the world of activism, Elliott is turning to a new tool, podcasting… Plus more. 

November features

  • AIMA’s Tom Kehoe looks at the take-up and value of GenAI.

  • Marex’s Lawrence Obertelli focuses on emerging managers and how they can best capture investor interest. 

  • Centalis’ Jon Hanifan examines scaling a fund and the required changes. 

  • MUFG Investor Services’ Daniel Trentacosta looks at the value of working with trusted partners to strengthen client services and technology.

  • Kayenta’s Mark Toone writes on the evolution of treasury management from a support function to a core strategic element within a fund. 

In Letter from America, our friend Prosek’s Mark Kollar examines the change in attitudes – for the better – towards the world of private credit: “It’s probably a safe market bet that it won’t be a longer period of time to see the rhetoric around regulation and reporting for private credit to become even more accommodating…”

We wrap with our regulatory update from RQC, with the FCA winning the appeal against BlueCrest, the FCA fining the CEO of an FCA-authorised firm, the publication of Market Watch No 80, and key findings from the FCA’s culture and non-financial misconduct survey. In the US, RQC looks at the SEC’s Division of Examinations 2025 priorities and the enforcement roundup. 

 

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A different type of alternative investment

This month, we head to the world of alternative alternatives… cars, watches, art and wine/ whisky. But first, performance and news. 

September was another turbulent month for hedge funds, but they mostly closed in positive territory. There were some sizeable fundraisings, but BlackRock’s AI fund stood out. Joint ventures and new targets were announced, with Apollo looking to hit $1.5 trillion by 2029. There were more developments in the UAE, with CFM opening up in Dubai and the region now housing a quarter of the top 100 hedge funds. Europe had a decent start in H1 PE fundraising, although H2 looks to be tougher. The Marex/ AIMA survey findings show that emerging managers are adapting to this environment. While Chris Hohn’s CIFF pledged an extraordinary $516 million in 2023 to good causes.  Plus more…

Douglas Walla, Founder of Kent Fine Art, writes on art’s bifurcation into value and momentum. 
PistonDAO’s Emanuel Georgouras looks at fractionalisation in the luxury car market.
Bordeaux Index’s Matthew O’Connell picks up wine & whisky and the role of trading platforms.
Carr Watches’ Dominic Carr expands on the return of the watch market and the ones to ‘watch’ out for.

In Letter from America, Prosek’s Mark Kollar delves into the fast-growing world of private credit and in particular the growth of Asset-Based Financing, which he sees as “taking center stage in private markets.”

 

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CFM Launches DIFC’s First Institutional Regulatory Solution

Capricorn Fund Managers announces the launch of Capricorn Fund Managers (DIFC) Limited (‘CFMD’), becoming the DIFC’s first dedicated investment management regulatory hosting solution.

Through the platform, which is established as an Incorporated Cell Company (‘ICC’) regulated by the Dubai Financial Services Authority (‘DFSA’), investment managers can operate under CFMD’s regulatory umbrella to run their funds from Dubai International Financial Centre (‘DIFC’). The platform is suitable for new and established investment managers across multiple strategies, including hedge funds, long only, real estate, private equity and venture capital.

Until now, investment managers operating in DIFC have required their own licence from the DFSA. CFMD adds a new option working closely with the DFSA and DIFC ensuring that each manager is fully compliant, with the right systems and controls in place. Today, DIFC houses more than 400 wealth and asset management firms, including more than 60 hedge funds, managing close to $700 billion.

CFMD is incorporated in the DIFC (Company Registration Number 9039) and is regulated by the DFSA for the provision of arranging deals in investments, advising on financial products, arranging custody, managing collective investment funds, managing assets and arranging credit and advising on credit.

“From a commercial perspective, Dubai has become the fastest-growing fund market, with enormous interest from managers and individuals,” said Craig Roberts, Senior Executive Officer. “By launching our regulatory hosting solution, we add a new and efficient service for managers to set up and carry out regulated activities – all under our licence.”

For Capricorn, the DFSA’s similar regulatory approach to the UK’s FCA is an important factor that has made this a relatively straightforward process. Capricorn’s UK platform is already well established, providing extensive experience and services across portfolio management and risk oversight?, operations, compliance and regulation.

Salmaan Jaffery, Chief Business Development Officer, DIFC, added: “Through Capricorn’s hosting solution, we are adding a new route for managers to get licensed and operational in Dubai. This is an exciting time for our fund management sector, which continues to go from strength to strength, and we have a long pipeline of managers looking at Dubai. A combination of our infrastructure, investors, strong regulatory regime, ambition and lifestyle opportunities makes Dubai a highly attractive fund hub.”

The advantage of taking the regulatory hosting route, includes:

  • Cost Efficiency: Enabling investment managers to opportunistically scale operations as their business develops, reduces the day-to-day operating costs significantly by being hosted on the CFMD platform.
  • Resource Efficient: By providing investment managers with expert investment and risk oversight, regulatory and compliance services, allows managers to focus on running their investment strategies.
  • Access to Expertise: Managers benefit from the support of the CFMD team covering all aspects of their risk, regulatory and compliance requirements. In the ever-changing regulatory landscape, CFMD can proactively support managers.
  • Immediate Credibility: CFM platform and processes have been through operational, risk and compliance due diligence from major institutions, providing hosted managers with immediate credibility in front of investors.
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The rise of Dubai

This month the Alternative Investor looks at recent fund news and a particular focus on Dubai, which has seen spectacular growth as a home for alternatives over the past few years.

August was turbulent for hedge funds, with equity-focused managers closing the month in positive territory while systematic and directional macro struggled. Two Sigma solved its succession conundrum, while other managers proved acquisitive as they build AUM. Ackman pulled the plug on his IPO plans and Elliott alumni spread their wings. Apollo and Carlyle appear to be on a roll, while private equity as a whole sits on mountains of dry powder. Millennium is the #1 investor in crypto, and Brevan and BlueCrest launched new arms. Plus more…

  • Salmaan Jaffery, DIFC’s Chief Business Development Officer, answers how Dubai has become the Middle East, Africa and S. Asia’s #1 destination for hedge funds.
  • Nick Smith, Co-Founder and MD of Highbrook Capital Consultant, examines the DIFC’s evolution over the past 15 years.
  • Ogier’s Richard Bennett, Dominic Athwal, and Ridhiima Kapoordiscuss Dubai’s growth to become a “regional home” for managers.
  • Craig Roberts, SEO, Capricorn Fund Managers (DIFC) Limited, turns to UAE infrastructure and initiatives that have enabled this extraordinary growth.
  • Oscar Orellana-Hyder, Co-Founder of Cordell Partners, discusses the popularity of the UAE from a talent perspective and how managers are “bulking up.”
  • Markus Susilo, Partner, and Narasimha Das, Associate Partner, Crowe UAE, close this section with a look at how to establish a business in the UAE and the importance of having the right legal structure.

In Letter from America, Prosek’s Mark Kollar shifts the focus away from Dubai to write about the NFL—a true US institution—and how private equity can now own stakes. The valuations are staggering, with the franchises the largest in professional sports, but the options are limited.

 

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Looking back at the first half

This month the Alternative Investor looks back at the first half of this year, reflect on what’s been driving the alternatives space and pick up changes in the regulatory environment with RQC Group.

We also include all our amazing guest features from the period, who have covered an enormous range of timely and relevant subjects, including tokenisation, commodities, insurance, ESG, impact investing, private market evolution, plus so much more.

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Investing in today’s commodity markets

This month the Alternative Investor looks at alternative fund news from the past month and insightful guest features on commodity trends.

We look back at hedge fund performances as macro this month comes under pressure. There was plenty of activity in the private equity space, with some decent fundraises, and intriguingly, we saw Horowitz pushing into this market. Data shows its $ value, with BlackRock buying Preqin. Jain is finally live, and Andurand looks beyond oil. While BlackRock and Carlyle dig deeper foundations into the private wealth market, plus much more.

  • Sam McMurray, Head of International Capital Introduction at Marex, writes about the increasing interest in commodity hedge funds, the rising number of funds and demand for talented PMs.
  • Juan Carlos Artigas, Global Head of Research, World Gold Council, looks back at gold in the first half of this year, with H1’s strong performance setting the stage for another potential “leg up” in H2.

In Letter from America, Prosek’s Mark Kollar examines the increasing interest and investment in women’s sports. Quite rightly, the fast-growing fanbases and associated uptick in advertising spending have resulted in accelerated interest from PE firms. The opportunity is the content play contribution to revenue streams. This is a space to be watched…

 

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A fresh perspective

This month the Alternative Investor includes insightful guest features on sector trends, offering you a fresh perspective on the alts industry.

We look back at fund performances and fundraising in PE, hedge funds and credit. Elliott has been very busy, not only raising funds but also taking sizeable positions; Ackman is lining up an IPO in 2025; funds are building commodity teams and crypto exposures; we pick up family office trends and much more. We also take a moment to look back at Jim Simons’ life, ‘An extraordinary life of a quant pioneer and philanthropist.’

  • Arosa Capital Co-Founders Alexandra Daly and Peter Soliman write about gender inequality in venture capital funding, with funds dedicated to female entrepreneurs not just a nod towards social justice but a testament to the untapped potential that can drive significant economic growth and innovation.
  • Prosek Partners’ Josh Clarkson changes tack with a look at the trend among large alternative managers to acquire and build life insurance components as they seek to generate uncorrelated outsized returns.

In Letter from America, Mark Kollar examines the rise of continuation funds as a standalone investment strategy. Should portfolio companies continue to be scalable with further potential upside, why not hold on to them a little longer to realize more value? Mark is starting to see sector specialists move more money into designated funds and believes there is further growth on the cards

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Rise of tokenisation

This month the Alternative Investor’s guests takes a look at the rise of tokenisation and what it means in the alts space.

We look back at what was a more difficult month for hedge funds, with macro managers again on top.  There were further fundraises, the successful CVC IPO, concerns over US non-competes, legal spats, big brand AUM growth, new big-name hires, a few hedge problems and crypto interest.

With tokenisation gaining prominence and traction, we have asked some experts in this field to elaborate on what’s going on.

  • In ‘Springtime for Tokenization’, Bitwise’s Vincent Molino, discusses how organisations have turned their attention to building tokenised products
  • Daphne Huang looks at how DeFi has shaken up the financial landscape with new smart contract technology and the critical nature of data interpretation.
  • Eulith’s Lucas Gaylord examines some of the noise surrounding tokenisation and the need for a secondary market.
  • PwC’s Robert Mellor and James Stewart discuss the growth of retailisation and the role tokenisation has to play within it.

Turning to North America, Prosek’s Mark Kollar writes about the accelerated growth of private wealth channels, where the competition is “fierce,” and the importance of having a strong brand and offering differentiated products.

 

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Democratisation of the alternatives industry

This month the Alternative Investor looks at the growing trend of “democratisation” in the alternatives industry.

We look back at another month of strong fund returns, with macro managers on top, and various fund raises. There is an upcoming sector IPO, which we are all watching closely, new legal cases, activist campaigns, founder shenanigans, potential comebacks and much more.

Sector democratisation…

  • Haynes Boone’s James Tinworth writes about how alts ‘democratisation’ or ‘retailisation’ is gaining traction and the increased interest in Europe.
  • PwC’s Mathieu Scodellaro and Jeremy Evans continue on this theme with a look at recent developments in the space.
  • Moving away from the legal side to organisational nuts and bolts, MUFG Investor Services COO, Mac Kirschner, writes about how firms are having to evolve their operations and businesses to enable this broader audience.
  • Fredriks Partners’ Max Heppleston wraps-up with what he is seeing on this trend and where/ how firms are hiring to fill the new roles.

This month, Prosek’s Mark Kollar’s Letter from America dives into the growing trend of NAV financing in the US, where managers are borrowing money based on the value of their portfolio, allowing them to raise capital when liquidity is low.

 

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Where does ESG stand?

This month the Alternative Investor takes a look at the latest goings on in the world of ESG.

We also look back at exceptional February fund performances (better than January) and sizeable fund raises. There were also interesting partnerships, steps to develop private wealth and build private credit businesses, signs that multimanagers are getting even more aggressive in their expansion plans, a new commodities business, funds closing, crypto funds having a ball as Bitcoin hits new highs, and much more…

ESG

  • We get brilliant insight on ESG programs and practices of the ten largest private equity firms from Dhruti Patel, Jelmer Laks and Sabrina Katz at Blue Dot Capital.
  • Ocorian’s Paul Spendiff writes about the importance of ESG credentials and strategy behind fund managers’ investment decisions.
  • AIMA’s Thomas Sharpe looks at EU ESG developments, with the review of SFDR and ESG Ratings Regulation.
  • Simmons & Simmons’ Lucian Firth and Tristram Lawton follow a similar line, writing about rising UK-US ESG tensions as approaches increasingly diverge.

Prosek’s Mark Kollar’s Letter from America lifts the kimono on GP stake sales, a trend that has been gaining momentum in recent years and is seeing a “consolidation of sorts.” Mark writes that this will “continue to provide high-performing firms an opportunity to raise capital and build their brands.”

 

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