“Hedge Fund Liquidations Outpace Launches in Trying Year” (Jan. 4, 2017 article by Lydia Tomkiw, FundFire). Article excerpt: Symphonic Alternative Investments, an Arlington, Va., based fund focused on emerging markets, launched early in 2016 with a founders class structure as well. It has two funds trading $5 million each of internal seed capital.
“We believed the time was right to move out on our own and begin investing in the space,” says co-founder and CEO Brian Walker.
Walker, along with co-founder and CIO Peter Trofimenko, wanted to establish a three-month track record before moving forward and marketing their funds. They have chosen to come out with a discounted founders’ class with a 1.25% management fee and a 15% performance fee, as well as another post-founder’s class.
“Building a business from scratch under any circumstances is challenging,” says Trofimenko. “[With] seeding, we consciously did it that way because we want to demonstrate to prospective investors that our skin is in the game… We put our money where our words are.”
For funds launching with less than $250 million in assets under management, outsourcing functions not tied to investment strategies has become important to ensure shops get off the ground, Napolitani says.
“Today you can outsource in a much more efficient, cost-effective, productive manner,”Trofimenko says. His firm has chosen to outsource various services, including information technology and legal.
Mill Hill also chose to use a third party IT provider, as well as a third party compliance solution that works closely with their in-house CCO.
“In terms of risk management and portfolio management that’s a key element of what we do, and we do that in-house,” Meneret says.
For managers that did take the plunge in 2016, launching amid tough conditions could help them differentiate themselves in a competitive and crowded marketplace.
“It’s pretty much like everything – when an industry is not very much loved, it’s often the time to get into it,” Meneret says. “It doesn’t always work, but hedge funds have been there for a long time and I don’t think they are disappearing.”
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