MAG Q3 2009 NEWSLETTER (MAG News)
MAG Q3 2009 NEWSLETTER
Segregated Managed Accounts: the saviour of the EU Directive, the fortunes of Administrators and the crisis in the Swiss Private Banking world?
Growth
Following the launch of MAG at the beginning of 2009, we are delighted that 9 months later we are advising a number of household name clients with assets of over $33billion.
It is clear that the Alternative Investments landscape has changed following the turmoil of 2008 and MAG is proud to be providing solutions for proactive institutions who are addressing these new challenges as opportunities. The business models that worked pre Lehman, Bear Stearns and Madoff are no longer applicable in today’s transparent and increasingly regulative framework and MAG is helping its clients put in place business models that reflect the needs and desires of investment managers, regulators and investors alike.
The Alternative Investment Fund Management Directive ('AIFMD')
MAG is at the forefront of advising a number of clients with forward thinking approaches to the current challenges and opportunities ahead. The impacts of the proposed “EU directive”, or its full title The Alternative Investment Fund Management Directive ('AIFMD'), are without consensus. In Europe, investment managers are faced with the challenge of preparing for a new regulatory environment that is not fully known and delivering investment products which match their investors needs.
MAG has identified a trend within the investment management community to investigate the options of `on-shore’ funds and to distribute an increased number of UCITS linked products. Consequently we have strong relationships with all the leading service providers and are advising clients on how to react to the current situation, whether is setting up mirrored fund structures in Ireland or creating wrappers and structured products on existing funds.
The demand for managed accounts is, in part, being driven by their ability to facilitate the new regulatory framework and provide the foundation of the new investment products (such as UCITS linked products) which are becoming available. Managed accounts, when properly constructed, provide an investment vehicle which is readily adaptable in changing regulatory or political environments, for example helping mitigate against recent issues that our Swiss clients face in reporting and tax implications on their US assets.
The “EU Directive” is someway off being finalised and it will no doubt go through many iterations between now and implementation given the number of parties lobbying and the vested interested of those involved. However, MAG believes that the outcome will favour on-shore type funds and those products with the ability to be distributed on-shore over a variety of jurisdictions such as UCITS linked products will over time become the usual route for investment into alternative assets. Single strategy hedge fund managers are hence starting to position themselves to take advantage of the regulatory environment and using the current tools available to provide investors with future proof investment opportunities.
Changing Landscape
Proactive Fund of Hedge Funds, Private Banks and Wealth Managers have already reacted in partnership with MAG to position themselves at the forefront of the regulatory changes and investor needs by migrating assets into managed account structures. Hedge fund service providers, administrators and custodians are also actively looking to build their own, independent, white-labelled managed account platforms and challenge the existing managed account platforms aligned with investment banks on price and service levels. MAG is currently engaged with a number of these service providers to enhance their product offerings and satisfy the rapidly growing requirements of better and faster reporting to all counterparties.
MAG has noticed that custodians, historically at the lower rungs of the service provider ladder, have risen to the forefront in client demand for providing solutions to investors needs – most notably segregation and safety of assets. Bankruptcy remote solutions and efficient cash management have driven the rise to the head of the table and MAG is advising clients on a greater breath of issues and challenges.
Administrators, like the custodians, have started to play a more prominent role as the guardians of the independent books and records of funds and provide complete and accurate NAV prices. Once seen as a back office function, many administrators are offering full blown middle office services, custody, treasury, fx hedging and enhanced reporting services. It is against the back drop of these infrastructural changes that the administrators have invested to address a competitive market where personal and strong IT skills are extremely important and a new form of independent managed account provider is due to emerge from these entities. MAG sees these administrators as the future bearers and providers of independent managed account solutions away from the Investment banks.
It is clear administrators have seen revenues fall and fiduciary responsibilities increase so it likely there will be consolidation in the market place. Those with products beyond NAV and pricing calculations will be the winners and we believe those with managed account solutions will lead the way.
Client Services
If you would like MAG to undertake an initial review, or discovery phase, of your business, please contact caelim.parkes@magconsultancy.com. Our current clients span North America, Europe, and Asia.
MAG Consultancy
MAG was launched in 2009 to address the changing needs of the Alternative Investments industry. The founders have over a decade of experience in running Segregated Managed Accounts. MAG advises Buy and Sell side, and other Service Providers in implementing or risk managing alternative asset investments through managed accounts.
Segregated Managed Accounts: the saviour of the EU Directive, the fortunes of Administrators and the crisis in the Swiss Private Banking world?
Growth
Following the launch of MAG at the beginning of 2009, we are delighted that 9 months later we are advising a number of household name clients with assets of over $33billion.
It is clear that the Alternative Investments landscape has changed following the turmoil of 2008 and MAG is proud to be providing solutions for proactive institutions who are addressing these new challenges as opportunities. The business models that worked pre Lehman, Bear Stearns and Madoff are no longer applicable in today’s transparent and increasingly regulative framework and MAG is helping its clients put in place business models that reflect the needs and desires of investment managers, regulators and investors alike.
The Alternative Investment Fund Management Directive ('AIFMD')
MAG is at the forefront of advising a number of clients with forward thinking approaches to the current challenges and opportunities ahead. The impacts of the proposed “EU directive”, or its full title The Alternative Investment Fund Management Directive ('AIFMD'), are without consensus. In Europe, investment managers are faced with the challenge of preparing for a new regulatory environment that is not fully known and delivering investment products which match their investors needs.
MAG has identified a trend within the investment management community to investigate the options of `on-shore’ funds and to distribute an increased number of UCITS linked products. Consequently we have strong relationships with all the leading service providers and are advising clients on how to react to the current situation, whether is setting up mirrored fund structures in Ireland or creating wrappers and structured products on existing funds.
The demand for managed accounts is, in part, being driven by their ability to facilitate the new regulatory framework and provide the foundation of the new investment products (such as UCITS linked products) which are becoming available. Managed accounts, when properly constructed, provide an investment vehicle which is readily adaptable in changing regulatory or political environments, for example helping mitigate against recent issues that our Swiss clients face in reporting and tax implications on their US assets.
The “EU Directive” is someway off being finalised and it will no doubt go through many iterations between now and implementation given the number of parties lobbying and the vested interested of those involved. However, MAG believes that the outcome will favour on-shore type funds and those products with the ability to be distributed on-shore over a variety of jurisdictions such as UCITS linked products will over time become the usual route for investment into alternative assets. Single strategy hedge fund managers are hence starting to position themselves to take advantage of the regulatory environment and using the current tools available to provide investors with future proof investment opportunities.
Changing Landscape
Proactive Fund of Hedge Funds, Private Banks and Wealth Managers have already reacted in partnership with MAG to position themselves at the forefront of the regulatory changes and investor needs by migrating assets into managed account structures. Hedge fund service providers, administrators and custodians are also actively looking to build their own, independent, white-labelled managed account platforms and challenge the existing managed account platforms aligned with investment banks on price and service levels. MAG is currently engaged with a number of these service providers to enhance their product offerings and satisfy the rapidly growing requirements of better and faster reporting to all counterparties.
MAG has noticed that custodians, historically at the lower rungs of the service provider ladder, have risen to the forefront in client demand for providing solutions to investors needs – most notably segregation and safety of assets. Bankruptcy remote solutions and efficient cash management have driven the rise to the head of the table and MAG is advising clients on a greater breath of issues and challenges.
Administrators, like the custodians, have started to play a more prominent role as the guardians of the independent books and records of funds and provide complete and accurate NAV prices. Once seen as a back office function, many administrators are offering full blown middle office services, custody, treasury, fx hedging and enhanced reporting services. It is against the back drop of these infrastructural changes that the administrators have invested to address a competitive market where personal and strong IT skills are extremely important and a new form of independent managed account provider is due to emerge from these entities. MAG sees these administrators as the future bearers and providers of independent managed account solutions away from the Investment banks.
It is clear administrators have seen revenues fall and fiduciary responsibilities increase so it likely there will be consolidation in the market place. Those with products beyond NAV and pricing calculations will be the winners and we believe those with managed account solutions will lead the way.
Client Services
If you would like MAG to undertake an initial review, or discovery phase, of your business, please contact caelim.parkes@magconsultancy.com. Our current clients span North America, Europe, and Asia.
MAG Consultancy
MAG was launched in 2009 to address the changing needs of the Alternative Investments industry. The founders have over a decade of experience in running Segregated Managed Accounts. MAG advises Buy and Sell side, and other Service Providers in implementing or risk managing alternative asset investments through managed accounts.