"Mighty oaks from little acorns grow" - a
Launching a fund, especially without the assistance of an
established asset manager, is challenging.
Speak to any fund managers that have considered it or
achieved it and they will say that the hurdles involved are
immense. It is labour intensive, the financial regulatory
burden has increased enormously since the well known events in
2008 and the initial and ongoing costs are expensive.
Investor demands have also shifted and once a fund is up and
running it is far from clear if many of them will be interested
in the new offering.
Most institutional investors, unless a superstar fund
manager is involved, want a fund to establish a track record
and build assets of at least $100 million before they will even
consider writing larger tickets.
Seeding platforms, where costs and risks are shared, can
resolve some of these issues. Many seeding platforms, developed
along the lines of geographical regions or strategy, already
exist for offshore hedge funds - and could be developed or
extended for the major UCITS fund domiciles in Europe.
The domiciles need to highlight their support for what is still
a fledgling sector - not necessarily along national lines - and
support some of the best managers within Europe and beyond.
Doing so, they may give hedge fund managers the space to take a
risk and bring a strategy onshore or develop a new one- while
offering investors a chance to invest at what is often the most
exciting period for a fund.
An example of this is the setting up of Emergence, with the
assistance of French government, which aims to strengthen and
develop the alternative asset management sector in that country
over the long term. The Dutch government, via ABP and APG Asset
Management, has also supported the development of a similar
seeding platform via the IMQubator group.
A seeding UCITS platform, if done right, can create an
entrepreneurial spirit and could result in more innovation as
well as a more exciting asset management industry across
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