AIF Magazine Amsterdam Investor Forum

12 February 2014

Powered by ABN AMRO Clearing

For professional and qualified investors only

The Amsterdam Investor Forum brings leading investment managers

and alternative thought leaders to Amsterdam.

DisclaimerThe information set out in this booklet has been prepared by ABN AMRO Clearing Bank N.V. (‘AACB’) exclusively for the Amsterdam Investor Forum, is not intended to be comprehensive and is proprietary to AACB and may not be disclosed to any third party or used for any other purpose without the prior written consent of AACB. AACB does not accept any liability which may be based on content of this booklet. In particular, no representation or warranty is given as to the accuracy or any (financial) information contained herein or as to the achievement or reasonableness of any forecasts, projections, prospects or returns.

contents

ForewordABN AMRO Clearing welcomes you to the 2014 Amsterdam Investor Forum. 05

Round tableAlternative-investment managers on alpha hunting versus asset gathering. 06

Catching up with clientsClients share their approaches and short-term views, and evaluate ABN AMRO Clearing services. 10

Choosing a depositaryJerome Lussan’s considerations for implementing the Alternative Investment Fund Manager Directive. 12

Giving children a chanceAlternatives 4 Children partners with the Dutch alternative-investment community to support children in need. 14

AIF FactorSix standout funds and investment strategies complete for first prize. 16

Seed investorsStrategies for cultivating returns by investing in fledging hedge funds. 18

Trade of the dayViews on current opportunities in merger arbitrage and special situations. 22

Bull or bear?Three alternative-investment managers offer their outlooks for the year of the horse. 24

Prime clearing services An overview of ABN AMRO Clearing services for alternative-investment managers. 27

AgendaThe 2014 Amsterdam Investor Forum programme, panels and participants. 30

Notes 32

Colophon

Editorial board

Joris Groot, Laura de Haan, Marc de Kloe, Christina Santore,

Gildas Le Treut

Design

Kollerie Reklame-Advies & Promoties

Media partners

Published by ABN AMRO Clearing ©2014

4

The alternative-investment industry has changed significantly since and as a result of the financial crisis. Ongoing

regulatory efforts aim to create greater transparency and strengthen our industry in the aftermath of the crisis, and

have also created challenges.

Meanwhile, investment in hedge funds continues to grow towards its post-crisis peak. With approximately 10,000

hedge funds worldwide and USD 2.8 trillion in assets under management, our industry is demonstrating its resilience,

dynamism and ability to adapt to market changes and conditions – a strong basis to build upon in 2014.

This year’s Amsterdam Investor Forum strives to support our industry’s further development by exploring priorities

and considerations for the coming year. Once again, the forum offers a full and exciting agenda featuring top speakers

and panellists, who will address the key topics shaping today’s alternative-investment landscape. We look forward to

interactive sessions between you and these industry experts, and are grateful for their commitment and collaboration.

The 2014 edition of the AIF Magazine provides the forum agenda, speaker and panellist biographies, investment-

manager strategies, seed-investor views, industry perspectives, regulatory developments, client profiles and more.

The pitches of our six AIF Factor finalists are also included. These fund managers will present their strategies during

the forum and you will subsequently vote for the most-attractive and compelling story.

Thank you for your participation in the 2014 Amsterdam Investor Forum. I hope you find the forum and the magazine

interesting and insightful, and look forward to receiving your feedback via an online survey that will be sent to you after

the forum. Meanwhile, I invite you to follow ABN AMRO Clearing developments and updates on Twitter and LinkedIn.

Yours sincerely,

Gildas Le Treut

Global Director of Prime Clearing

On behalf of ABN AMRO Clearing, I am pleased to welcome you to the third Amsterdam Investor

Forum as well as present you with the 2014 edition of AIF Magazine.

foreword

5

Arie Assayag

Max von Bismarck

round table:alpha hunting versus asset gathering

What is the role of hedge funds in a portfolio – should they be seen as diversification strategies or as target-return strategies?

Arie Assayag

“The role of hedge funds within a portfolio has significantly

changed in the last years. At UBP, we see distinct roles. The first

meets absolute-return needs and acts as a diversifier to the

non-risky part of a portfolio (fixed income). The second addresses

directional-return needs in a liquid format and acts as a diversifier

to the risky part of a portfolio (equities). The last role meets

directional-return needs in a less-liquid format and acts as a

diversifier to the non-liquid part of a portfolio (i.e. private equity,

real estate or infrastructure).”

Max von Bismarck

“We believe hedge funds should be used both for diversification

as well as target-return strategies. They can provide at least

modest diversification benefits, as they typically have low

correlations to most asset classes (bonds, precious metals, etc.)

and a below-one correlation to equities. When allocating to hedge

funds in the current market, we believe investors should run a

dynamic and active allocation where strategy selection and

weighting are as important as a manager’s name. One should

also look not just at managers but at themes, and look for the

best people to execute on them.”

InvestHedge editor Niki Natarajan explores current strategies for growth and recent regulatory impact

among four leading alternative-investment managers during the ABN AMRO Clearing 2014 Amsterdam

Investor Forum.

6

Christopher Fawcett

Alexandre Col

Niki Natarajan

Alexandre Col

“Hedge funds are a good diversifier for a portfolio of traditional

assets. I do not believe that a target-return strategy is achievable.

In the framework of a balanced portfolio of stocks and bonds, this

diversification can be made in two different ways. An investor can

use some specific strategies to achieve diversification in each of

the asset classes; the equity component is complemented by the

inclusion of equity long/short and event-driven strategies. The

fixed-income component benefits from the inclusion of multi-

strategy, credit or distressed (so-called uncorrelated strategies),

while traders can perform an overlay for the entire portfolio. An

alternative approach is to include a diversified fund of hedge funds

alongside the rest to achieve the same goal. This second solution

offers the advantage of being simpler to implement.”

Christopher Fawcett

“The variety of hedge-fund strategies and styles is such that

portfolios of hedge funds can be constructed and managed to

various and specific objectives. In most market conditions, there

is an element of trade-off in performance between portfolios that

act as strong diversifiers and those likely to achieve high target

returns, for instance the inclusion of directional equity exposure.

What is important is that investors are clear in their objectives and

stick to them.”

Are funds of hedge funds still valid solutions?

Arie Assayag

“Funds of hedge funds are still valid solutions provided that their

role is clearly defined, as mentioned.”

Max von Bismarck

“While the fund-of-hedge-funds industry continues to consolidate,

we believe those that successfully provide value to investors will

continue to raise assets, in stark contrast to those that struggle

to provide value. Funds of hedge funds should provide value in

the form of competitive absolute and relative returns compared

to other asset classes with lower fundamental risk of loss and

volatility, lower correlation and reasonable liquidity terms.

A well-managed fund of funds should be able to provide at least

competitive returns to other asset classes over a full market cycle.

Whether or not they outperform equities over the next cycle is

debatable, but we expect much lower volatility than equities.”

Alexandre Col

“Funds of hedge funds remain the best solution for building

alternative allocation. In addition to the necessary selection process,

they diversify individual-manager risk, provide alternative asset

allocation and transform individual hedge funds into an asset class.”

7

Christopher Fawcett

“In a word, yes. Investing in hedge funds can either be done directly

or by using specialist managers to select and manage an allocation

to hedge funds. Allocating directly requires considerable resources

given hedge-fund investing is not straightforward in terms of due

diligence, monitoring, trading, administration, performance and risk

measurement, among others. It also requires experience. This is why

a large proportion of investors use specialist fund- of hedge-fund

managers either by investing in their commingled funds of hedge

funds, or by mandating them to manage a bespoke portfolio for them.”

How are hedge funds coping in the uncertain world of record low yields and rising equities, and what themes are still left to play?

Arie Assayag

“Equity-related and global macro strategies are the best suited to

this type of market environment. Long-term arbitrage strategies

could also be appealing due to new regulation on capital rules.

In terms of portfolio protection, shorting equities is now expensive.

Therefore, we tend to favour trading or tail-hedging investments.”

Max von Bismarck

“We recently became more bullish on the US economy and US

equity markets and therefore currently favour more-equity-biased

strategies. We like event-driven strategies because they are able

to exploit pricing inefficiencies prior to or after corporate events.

Event-driven equity should, we believe, generate returns if equity

markets do not continue to appreciate, attractive upside capture

if they do, and less downside risk if markets correct. While the

upside potential of cash-flow generative strategies is, we believe,

less attractive than it previously was, the theme still presents some

opportunity. This strategy could generate competitive returns if US

and global economies continue to improve or even remain in low

gear, and should have less downside risk from market shock or

correction than more-catalytic strategies. Select distressed situations

in Europe could also offer potential for equity-like or better returns if

conditions improve. Even the long-biased, long/short equity space

is finally offering some opportunities. And in emerging markets,

while current issues are likely to provide headwinds and it is too

early to allocate significant funds, we may see more opportunity

in the second half of 2014.”

Alexandre Col

“Judging by 2013 performance, the industry is generally delivering

solid returns. The fact that asset inflows have taken the industry

to an all-time high seems to indicate that this view is shared by

many investors. However, some distinctions need to be made

among different strategies. The low-interest-rate environment

makes life very complicated for fixed-income and currency traders

(mainly macro managers and CTAs) – which are underperforming –

and is compressing the returns achievable in credit strategies.

Yet in a world less impacted by macro fears, equity managers

(be they event-driven managers or fundamental stock pickers)

are performing very well. They should continue to do so as long

as the cost of corporate financing stays very low by any historical

comparison, facilitating a robust pipeline of corporate events (such

as acquisitions, share buyback, debt refinancing, spin-offs) that are

attractive for equity holders and represent investment opportunities

for talented managers.”

Christopher Fawcett

“The environment has changed for the better, as 2013 broke the

trend of the past few years by closing with a strong second half.

Over the past year, we have witnessed a far-broader dispersion of

returns across markets and sectors, creating an environment that

has become more conducive to alternative investing. We anticipate

continued opportunities for macro managers due to diverse central-

bank intervention across developed and emerging markets.

We also believe that the environment is likely to be fruitful for

many event-driven and fundamental long/short equity managers,

with short selling resurfacing as a potential source of returns.”

Regarding operational considerations such as the Volcker Rule, Dodd-Frank Wall Street Reform and Consumer Protection Act and the Alternative Investment Fund Manager Directive (AIFMD), how is regulation changing the playing field?

Arie Assayag

“The new regulatory framework is challenging and costly. As a

result, more consolidation within our industry can be expected.

However, we believe that these legal and operational changes

could also represent long-term opportunities.”

Max von Bismarck

“We believe the implications for Volcker Rule, as well as Basel III,

represent one of the more-significant secular investment

opportunities for hedge funds (and the buy side) over the past

decade. The combination of tighter capital and liquidity standards,

and the winding down of proprietary trading desks has clearly

improved the opportunity set for hedge funds focused on

sophisticated fixed-income and event-driven strategies

(specifically, event-driven equity). While we have yet to see the

real effects of AIFMD, we are closely monitoring regulatory

developments to ensure that we act appropriately.”

Round table: alpha hunting versus asset gathering8

Alexandre Col

“Focusing on AIFMD, the European passport issued by the

regulator will boost European funds of hedge funds in the same

way that the introduction of Undertakings for Collective

Investment of Transferable Securities benefited long-only funds.”

Christopher Fawcett

“Clearly, regulation is increasingly a factor, both in hedge-fund

management and investing. The related costs and drain on

management time are more of an issue for smaller firms.

Most firms have adapted to the environment and in our case,

our French investment entity gained AIFMD status in September

2013, and we have our own range of onshore funds. From an

investor perspective, knowing that these funds are being regulated

provides additional comfort. Therefore, as onerous as it may be,

we see increased regulation as a positive move for the industry.”

Arie Assayag is Chief Executive Officer of Union Privée Bancaire

(UBP) AIternative Investments. Based in Geneva and with offices

in major financial centres worldwide, UBP is one of Switzerland’s

leading banks and a pioneer in alternative-asset management,

investing in hedge funds since the early 1970s. Today, UBP is

one of Europe’s top five alternative-investment businesses,

managing USD 11 billion in assets (31 December 2013).

Max von Bismarck is a Partner and Chief Executive Officer,

Europe at SkyBridge Capital. Founded in 2005, SkyBridge is

a global alternative-investment firm with approximately USD

9.3 billion in total assets under advisement or management

(30 November 2013). SkyBridge provides investment services

including commingled fund-of-hedge-funds products, customised

separate-account portfolios and hedge-fund advisory services.

Alexandre Col is Member of the Executive Committee and Group

Head of multi-management and asset management within

Banque Privée Edmond de Rothschild, part of the Edmond de

Rothschild Group (EDR). Geneva-based EDR manages assets

of USD 57.6 billion via its investment funds and dedicated accounts,

including USD 7.7 billion in alternative funds of hedge funds

(31 December 2013).

Christopher Fawcett is Senior Investment Officer for Permal

Group. He focuses on Permal’s Jubilee funds and is a member of

the firm’s Global Investment Committee. Based in New York and

London, Permal is a leading global alternative-asset manager,

with assets under management of approximately USD 22 billion

(31 December 2013). Permal offers investment solutions through

established funds and customised portfolios.

Niki Natarajan is Editor of InvestHedge, a global publication

covering hedge-fund investors, including institutional investors,

funds of hedge funds and other hedge-fund allocators such as

family offices and sovereign-wealth funds.

9

PresagiumPresagium BVI Ltd is a systematic hedge fund trading G10 spot

FX and liquid futures. Presagium’s principal strategy predicts

short-term price using proprietary mathematics. An optimal

portfolio is calculated and updated continually throughout the

23-hour trading day. Trades are generated and executed on a

proprietary low-latency trading platform.

Joseph Haggenmiller,

Founding Co-Partner,

Presagium BVI Ltd

On Presagium differentiators:

“Presagium trades in an underexploited time scale of several

minutes to several hours. In order to profitably exploit that time

period, an integrated modelling and trade-execution system is

needed to filter the signal from the noise and then to minimise

trading cost/impact. Average holding time is 25 minutes.”

On 2014 trends:

“Increased bond-market volatility will be evident, as interest rates

begin rising above zero. That will have repercussions not only in

fixed-income markets but in currency markets as well. Investors must

be prepared to capitalise on this, either by choosing a directional

side or trading the volatility. Presagium’s core model adapts to

volatility regimes and we look forward to more-pronounced price

movements in currency and other asset classes. However, other

investors may find the new volatility regime unsettling.”

On ABN AMRO Clearing:

“ABN AMRO has the dual capability of low-cost clearing and the best

relationship management of any firm we have encountered in futures.

We were introduced to ABN AMRO Clearing by Brian Duff, Head of

US Sales. We currently trade G10 spot currency but will be using

ABN AMRO as our clearing firm for our high-volume futures business.”

Done Done Hedge Fund is a market-neutral arbitrage fund specialised

in capital-structure arbitrage on markets worldwide, but with a

clear focus on European markets. Done is particularly focused on

risk management, a strong and balanced asset allocation, and

comprehensive fundamental and quantitative research.

Iain Somers,

Partner,

Done Hedge Fund

On Done differentiators:

“Our team comprises diverse backgrounds (arbitrage trading,

market making, day trading and auditing) that supplement each

other in designing, implementing and analysing trading strategies.

ABN AMRO Clearing (AAC) is proud to work with a host of talented managers representing a spectrum

of strategies. Here, several clients share insights about their approaches and short-term views as well as

an evaluation of AAC services.

10

catching up with clients

Before Done, we had successfully worked together for years, so

our team and our strategies are proven. Our strategies perform in

any market environment and our trading models can adapt to

changing market conditions.”

On 2014 trends:

“Done is market neutral; therefore, we do not really have a view on

the direction markets are moving in. Our strategies are not affected

by market direction, which is one of our strengths. Regarding our

main strategy – capital-structure arbitrage – we expect spreads to

narrow slightly and trading conditions to be favourable. This will

be an important year in terms of regulatory changes, but we do

not expect these to materially impact our results.”

On ABN AMRO Clearing:

“ABN AMRO Clearing is our prime broker and provides us a wide

variety of services, ranging from credit lines to dividend-tax

reclaims. We also make use of ABN AMRO Market Gateway

global fix engine for trading our arbitrage strategies on markets

worldwide. In addition to an outstanding clearing product,

AAC has a proactive attitude towards new markets and products.

Likewise, their reporting tools are outstanding and form a very

good basis for our risk management.”

Mint TowerMint Tower Arbitrage Fund is a multi-strategy fund with a focus

on convertible arbitrage and volatility arbitrage. The fund

successfully targets positive absolute returns and low volatility

in both downward and upward markets.

Wilrik Sinia,

Director,

Mint Tower Arbitrage Fund

On Mint Tower differentiators:

“Our founding partners have been engaged in proprietary trading

together since 1998 and have extensive expertise and experience

in both convertible bonds arbitrage and volatility arbitrage.

The combination of these strategies adds value in terms of risk

mitigation and return on top of their individual return profiles.”

On 2014 trends:

“I would not be surprised by prolonged bullishness. The absence

of headwinds could make this another good year for economic

growth, especially compared to the past six years. In the longer

term, however, the lack of fundamental reforms will persist and

negatively impact growth, especially in Europe. These conditions

will initially be challenging for a conservative volatility-based fund

such as ours, as our strategies perform best in volatile and

uncertain markets. This is where convertible arbitrage and event-

driven trades can add diversification, as these strategies tend to

perform well in bull markets.”

On ABN AMRO Clearing:

“Mint Tower has a strong business relationship with ABN AMRO,

which we use for clearing and custody. ABN AMRO Clearing

provides world-class risk modelling. Although current regulatory

constraints are immense, there is an absolute willingness to

navigate these challenges.”

Curzon Capital LtdCurzon Capital Ltd is the fund advisor to Curzon Alternative

Investments Ltd (CAIL), a segregated-accounts company

registered in Bermuda. The CAIL suite of niche investment funds

ranges from traded-options and metals-futures funds to a

commercial-teak-plantation fund. The Traded Options Fund is

CAIL’s flagship fund.

David Guest,

Director of Operations,

Curzon Capital Ltd

On CAIL differentiators:

“CAIL creates specialist funds to meet demand from both

individual and institutional investors for exposure to diverse

alternative investments in the non-core part of their investment

holdings. The Traded Options Fund executes ‘volatility plays’ or

indeed ‘trend plays’ and lends itself to achieving positive returns

regardless of market conditions.”

On 2014 trends:

“The Traded Options Fund is market neutral, so macro trends as

such are not relevant. We aim to achieve capital growth through

exposure to traded options, driven by trading volatility and trends.”

On ABN AMRO Clearing:

“Since May 2012, CAIL has used ABN AMRO Clearing for the

execution and custody of all positions held and written for

the Traded Options Fund, which is our longest-running fund.

ABN AMRO Clearing provides the fund with daily statements as

well as competitive pricing on execution.”

11

CurzoNalternative investments

choosing a depositary: a manager’s AIFMD due-diligence checklist

Managers are expected to choose depositaries following rigorous

due diligence. The resulting appointments must subsequently be

reported to the local regulator and governed by a written contract

defining the relationship between a manager and a depositary. In

several countries – particularly in the United Kingdom – the regulator

may verify this relationship by contacting a depositary directly for

certification that its services comply with regulatory requirements.

More importantly, regulators may (and this is certainly the case

in the UK) review details of the due diligence conducted by an

alternative-investment fund manager on a depositary.

What to look for in a depositaryThe AIFMD depositary rule introduces one of the directive’s

most-controversial changes: depositaries are liable to AIFs or their

investors for certain losses, and will be required to return financial

instruments lost in their custody without undue delay. In practice,

it is still unclear whether depositaries will be able to insure

themselves against these new liabilities at commercially viable

rates. In any event, when conducting due diligence, managers

must evaluate service providers’ financial soundness.

Depositaries are required to continually review the valuation

methodology of AIF assets, ensuring it is consistent and

appropriate. Most depositaries are familiar with long/short funds,

but when it comes to hedge-fund strategies, derivatives or

private-equity investments, managers must confirm whether

depositaries have the resources to do so.

In parallel, depositaries are also ultimately responsible for the

custody of assets and, therefore, for due diligence on any prime

brokers or sub-custodians to which they delegate any of their

services. Depositaries are consequently also responsible for the

entire chain of service delegation; therefore, choosing the right

prime broker – one that can provide the ultimate level of asset

protection – is paramount for them. In turn, when selecting

depositaries, managers should verify whether processes ensuring

through due diligence and checks are in place.

Depositaries are also obligated to conduct ongoing AIF oversight,

including: insuring and monitoring of transactions; monitoring of

income distribution; asset valuation; and other tasks. This represents

a new reality for depositaries. Should breaches or inconsistencies in

these functions be identified, depositaries must follow an escalation

process to report these to any competent authorities. Therefore, before

concluding service contracts with depositaries, managers should

check whether proper escalation processes are in place.

Managers must also verify depositaries’ regulatory authorisation

in local jurisdictions and confirm compliance with all the legal

and prudential requirements. This applies to credit institutions,

investment firms or other institutions that can operate as

depositaries according to local regulations.

Should a depositary also operate as a prime broker, the manager

should look for appropriate segregation of duties, Chinese walls

and conflict-of-interests policies, in alignment with the AIFMD

requirement to functionally and hierarchically separate the

Article 21 of the Alternative Investment Fund Managers Directive (AIFMD) requires all managers

of European Union-based alternative-investment funds (AIFs) with total assets under management

exceeding EUR 100 million to appoint a single depositary for those funds no later than 22 July 2014.

The AIFMD grants a depositary crucial responsibilities that reach far beyond the mere safe-keeping

of assets or monitoring of transactions, whereby it becomes a kind of guardian of the AIF it services.

Therefore, it is imperative that managers familiarise themselves with implications of these new

responsibilities as well as define a practical approach to depositary selection.

12

Jerome Lussan is Founder and Chief Executive Officer

of Laven Partners, a compliance and operational due-

diligence consultancy, and Laven Legal Services, a funds

law firm. With vast knowledge and understanding of

the regulatory, fiscal and legal requirements that affect

the global asset-management industry, he is able to

simultaneously focus on legal and commercial issues and

combine insights with investor needs.

As an expert on the new UCITS and AIFMD requirements

in Europe and new regulations in Singapore, Jerome takes

a strong ethical stance on investor protection. He believes

that if integrated by managers, this approach will continue

to foster industry growth. Jerome’s interventions have

helped investors avoid operational failures and frauds, and

have been proven to help managers raise more money

and manage it more safely. He is also author of the FT Guide

to Investing in Funds (2012).

The custodian/prime broker relationship: three scenarios

The requisite segregation of prime broker and depositary duties –

coupled with depositary liability to AIF investors – introduces a

new dynamic between these two functions, which managers

should be aware of. This new relationship can take one of the

following three forms:

1. A depositary appoints a prime broker as a sub-custodian,

with the prime broker using its own sub-custody network. In

this case, either the depositary discharges its liability to the

prime broker in case of a loss, or the prime broker provides

an indemnity to the depositary.

2. A prime broker is appointed as sub-custodian, but uses a

depositary’s sub-custody network. This solution gives the

depositary greater control over the assets but requires more

investment from the prime broker, possibly requiring integration

into new sub-custody networks in addition to its own.

3. A prime broker becomes the direct counterparty to an AIF,

while allowing a depositary to perform the custodian function.

A contractual relationship between the prime broker and the

depositary still exists, in which case assets are used as

collateral. This approach may reveal some operational

difficulties for the prime broker as well as intraday exposure

on the part of the depositary to the prime broker.

performance of its depositary functions from its tasks as a prime

broker. The AIFMD also states that potential conflicts of interests

must be properly identified, managed, monitored and disclosed to

the investors of the AIF. Further information about the potential

custodian/prime broker relationship is provided in the inset.

Manager musts and obligationsOn their part, managers will need to accept some constraints,

such as allowing depositaries to monitor operations, regulatory

compliance and transactions in keeping with oversight

responsibilities. This includes facilitating on-site depositary visits

as needed or providing access to AIF books.

Prior to appointing depositaries, managers must clearly identify

portfolio assets – also in relation to asset custody. The Markets in

Financial Instruments Directive distinguishes two types of assets:

those defined as financial instruments and that are custodial assets,

and other assets, which are everything else in a portfolio. Transferrable

securities must be held in custody, while for other assets, a depositary

is only required to verify ownership and maintain records.

These due-diligence tips pertain to specific aspects of depositary

duties. Managers should also include routine verifications such as:

background checks, business continuity (especially IT recovery

plans) and general governance.

Costs and considerationsAccording to a 2012 Deloitte survey1, the biggest AIFMD-related

industry concerns were depositary costs (84%), followed by

delegation restrictions and changes to contractual arrangements.

Indeed, before Level 2 measures were published, the industry had

anticipated a significant cost impact, from 10 to 30 basis points.

However, the first batch of Level 2 rules published in March 2013,

clarified regular liability for other assets, introducing ex-post cash

flow monitoring instead of ex-ante, and countries such as the UK

and Luxembourg have confirmed specific depositary requirements

for other assets, which considerably reduced cost expectations.

The industry is now looking at costs of 4 to 5 basis points.

The AIFMD depositary requirements are not just additional

regulatory costs; they will be viewed by investors as an added

layer of security and will differentiate EU AIFs from Cayman

Island AIFs. The operational robustness and increased

responsibility of depositaries should strongly support the

commercial success of the EU AIFM brand among investors.

13

1Responding to the new reality – Alternative Investment Fund Managers Directive Survey,

July 2012.

giving childrena chance

Founded in 2011 as a private initiative of Netherlands-based

alternative-investment professionals, Alternatives 4 Children (A4C)

is an independent charitable foundation that aims to improve the

well-being of children in the developing world, particularly in terms

of education. A4C does so by financing carefully selected,

sustainable projects with the help of local alternative-investment

professionals, encouraging direct individual and corporate

involvement.

Promising projectsPromising, small-scale projects that can make a difference to

communities, countries and the next generation are chosen

on the basis of specific criteria. Only initiatives that fall under

education, healthcare, hygiene, clean water, housing and family

support are considered. A candidate project must also have the

potential to become sustainable and self-reliant and should

encourage entrepreneurialism. “We require that selected projects

show personal involvement and commitment by setting objectives

and realistic short- and long-term goals,” says A4C Co-Founder and

Co-Executive Director Sophie Robé. “Therefore, we aim to support

projects for a maximum of three years.”

Local anchoring is therefore a key criterion, whereby personal

involvement of parents, teachers and the community ensures

commitment to the projects. According to Sophie, this willingness

is not only important for educational continuity and a safe

environment for the children, but also for ultimately ending

dependence on external funding.

All A4C projects must be fully transparent regarding funding

allocation. “We expect beneficiaries to provide regular status and

financial updates,” Sophie explains. “This allows us to set realistic

goals for the projects we select and have a clear overview of how

our funding is allocated,” she says, adding that funding growth will

enable diversification among several small projects. “The modest

scale of our projects ensures that A4C can add maximum value

and impact,” she confirms.

Educational opportunities A4C is currently supporting seven qualified projects globally, through

which they are reaching more than 500 children. These include:

▶ Education and urgent access to food and water in a refugee camp

in Mauritania for 65 displaced students of Mali’s Scarab School.

▶ Scholarships for the top students among 2,500 children

receiving secondary education and vocational trainings from

the Kamitei Foundation.

▶ Access to education and school supplies for 65 children

residing at Macheo Children’s Home in Kenya.

▶ Certified education in buildings compliant with national safety

standards for 150 children in Ghana.

▶ Extracurricular financial and entrepreneurial education via Day

for Change Foundation for 150 underprivileged children in the

Netherlands.

▶ Education and social services for more than 120 children at

the Edelweiss School in Mumbai (see inset).

▶ Education, tutorial support and uniforms for 65 girls from the

Pardeshi slum in Mumbai via Tiny Miracles Foundation.

Alternatives 4 Children introduced a new kind of funding to the Netherlands’ alternative-investment

community. Now, some of the country’s biggest managers are supporting some of the world’s poorest

children by raising money for social and educational programmes to improve young lives.

14

A4C helps India’s Edelweiss School blossom

One hundred twenty-seven boys and girls between the ages of

four and six are enrolled in the Edelweiss School in Bangalore,

India. Thanks to A4C financial support, these students – who live

in a large slum nearby – attend classes six days a week, 11

months per year, and are given two nutritious meals daily – all

free of charge. Most of these children would have never been

able to receive a good education as their parents have a single

objective: to earn enough money to survive. Now, through school’s

structured programme, A4C is giving Bangalore’s slum-dwelling

children a chance.

All of the children at the Edelweiss School come from extremely

poor families. Before attending school, most of them roamed

Bangalore’s littered streets or cared for younger siblings at

home. In both cases, they hardly ate, while their parents –

typically construction workers – worked all day. In addition to

malnutrition, most students are also at risk for numerous health

problems as they lack access to clean water and plumbing, which

exposes them to unsanitary conditions. For a child who comes

from a home without electricity, running water or a toilet, everything

at school is a learning experience. Likewise, a lack of proper

nutrition can be an obstacle to a solid education. The Edelweiss

School takes all of this into consideration in its holistic approach.

Physical education has been added to the school’s complete

curriculum thanks to a new rooftop playground, additionally funded

by A4C. Students also undergo regular physical examinations to

ensure that they receive any medical care they need. The school’s

proximity to the slums makes it very easy for mothers to walk

their children to school, which also creates good connections

between parents, teachers and medical professionals.

In summary, Edelweiss offers its students a well-rounded,

complete curriculum in English. After two years of study,

students can subsequently enrol in a quality English middle

school upon passing an entrance exam, further fostering their

future prospects. By investing in the Edelweiss School, A4C

helps students gain the knowledge and well-being they need to

take the first steps towards breaking the cycle of poverty.

For more information regarding the Edelweiss School, please

contact A4C Co-Founder and Co-Executive Director Marc de Kloe:

info@a4c.nl

A4C organises fund-raising events such as cocktail receptions,

sports events and gala dinners for its alternative-investment

network in the Netherlands, and is always seeking sponsors.

Likewise, the foundation accepts personal donations. “By giving

back through A4C, industry professionals can connect and help

children in need,” Sophie concludes.

ABN AMRO Clearing supports A4C in the spirit of addressing

client and stakeholder needs, especially when these extend

beyond business to all facets of society. Your AIF registration

donation will fully benefit A4C. For more information on A4C

and how to provide support, please visit a4c.nl

Kamitei Foundation

Edelweiss School

15

AIFfactor

Pitch 1: Saemor Europe Alpha Fund/Saemor CapitalImagine… you have been an equity investor for almost 20 years.

You have seen that some stocks outperform others consistently

and you have found an objective method to select such stocks.

You always wanted to set up your own shop. And you have secured

a seeder willing to commit EUR 400 million for many years. This is

What are today’s most-compelling, persuasive, provocative and entrepreneurial investment approaches?

The second edition of the AIF Factor invited alternative-investment managers from across the globe

to pitch their propositions. A jury of six – from ABN AMRO Clearing as well as external parties –

evaluated more than 100 submissions from new as well as known managers to select six finalists that

stand out in the crowd. Now, it’s up to AIF delegates to pick the winner from among these six pitches –

published in original form to preserve submission integrity.

the story of Saemor Capital. Attracting the best quant equity talent

in the Netherlands, we set up an advanced systematic equity-

market-neutral strategy using a model to rank stocks from zero

to 100. Being equity investors by nature, we know quant models

work well through time, with two exceptions: at turning points

in equity markets and when other things drive individual stock

prices like a takeover bid. We tackled both issues and results

have been on target. Providing zero correlation with markets

and peers, the fund adds value to most hedge-fund portfolios.

Pitch 2: Blenheim DDA/Blenheim Fund ManagementNightly drivers are all too familiar with rabbits staring in their

headlights. Temporarily blinded, they freeze while their eyes try

to adjust. This behaviour seems ridiculously ineffective given the

approaching danger. This reaction actually isn’t too different from

that of many investors. Blinded by a sudden adverse development,

many decide to just sit still and hope for the best. This is striking as

there have been enough ‘headlight events’ over the past decade.

Moreover, there are effective insights around that are both sensible

and tested. However, their use has largely been limited to active

management where they fail to make an impact on the bottom

line. We believe that building dynamics into your asset allocation

will provide invaluable defences in the years to come, because

it’s not a question whether the headlights will come again, but

when. Being prepared will prove to be a matter of survival.

16

Pitch 3: Aequam Diversified/Aequam Capital Management“The problem with investors... they dream too much! You are

looking for aliens, tall and large-shouldered guys, fresh breath,

white teeth, top pedigree. A striker but also a goalkeeper. You

want performance, smooth volatility, no drawdown, transparency,

no operational risk... only the upside! Hey guys, wake up!

Come talk about your reality with us. We will offer you our best

risk allocators. With my partners, you will find bowed legs,

except Emmanuelle, our Head of R&D, she is really tall. You will

find normal people, um, except Emmanuelle, she is a PhD in

signal processing! And sometimes during our meeting, when

Aequam Diversified will be in a drawdown, you may notice bad

breath around… Dream about your family, your friends, sex,

food – or food, sex, your choice! We are real asset managers,

not aliens! One dollar invested with us goes to a risk allocation,

looking for performance. Invest with us at Aequam Capital.

We take care!”

Pitch 4: Citrine Capital/Citrine Capital ManagementThe king is dead, long live the king! The commodities supercycle

is dead. Will commodities investing live on? The volatility cycle

is about to begin. Commodities are being extracted in more

challenging ways and from more remote and unstable areas,

increasing risk of supply disruption and causing supply to

become more inelastic compared to demand. Who can profit

from the commodities volatility cycle? Recent closures of

diversified commodities hedge funds highlight that sector

specialists are needed in these conditions. Managers who have

the deep expertise and contact networks in their specific sector

needed to deliver alpha without the support of the supercycle.

Managers who favour a nimble, actively traded options portfolio

in order to adapt to volatile, choppy markets. Managers such as

Citrine Capital, an Albourne-rated metals specialist with almost

two years of track record managing institutional assets. With an

ex-Tiger Cub team, there aren’t many specialists like them.

Pitch 5: Laffitte Index Arbitrage/Laffitte Capital ManagementIn the early 19th century, the French banker Jacques Laffitte

said, ‘Those who pay their debts get richer.’ The moral of this

expression is that when repaying your debts, you remove a

weight that relieves you psychologically. I propose to you today

to relieve you by investing in Laffitte Index Arbitrage, which is

focused on index and dividend arbitrage. The fund seeks the

best balance between risk/reward and capital preservation.

You would be hard-pressed to find an equivalent of our 2013

Sharpe ratio of 3.45 and beta of 0, earned through innovative,

risk-controlled strategies. There is also a Dutch proverb

that says, ‘Belofte maakt schuld’ – ‘a promise is a debt.’

Making you this promise of performance means that I am

contracting a debt vis-à-vis you. I would invite you to come

and visit our offices in Paris, and you will see that in France, in

terms of handling and dealing with debt, we are the champions.

Pitch 6: Eyck European Tactical Distressed Opportunities Fund/Eyck Capital ManagementI launched the Eyck European Tactical Distressed Opportunities

Fund in May 2013, having previously managed Halcyon’s European

credit business and prior to that working in European distressed

at Fortress and Goldman Sachs Special Situations. I was joined at

Eyck by two former colleagues and five others. We focus on liquid

long and short investments across credit and equities in European

distressed situations. We find this a very attractive opportunity

set as there is a natural arbitrage of long-only investors who

typically do not like or understand companies with credit issues,

which is exactly why we focus on companies with high leverage.

Running our portfolio with a low net exposure, we have achieved

attractive risk-adjusted returns and have not had a down month

since launch. Finally, as a Dutchman, it would be a great honour

to present our fund to key players in the Dutch alternative-

investment industry.

17

Just as traditional seed capital plants the initial investment allowing a business to take root, seed

investors in the alternative-investment industry fund fledgling managers. Beyond the potential risks,

these four seed investors aim to reap returns. Here, they explain how they are cultivating them –

expertise they will use in judging the winner of the 2014 AIF Factor.

IMQubator Jeroen Tielman is Chief Executive Officer of IMQubator (IMQ), an

all-round hedge-strategy manager based in Amsterdam, with a

primary focus on early-stage and younger-manager investment. The

former are provided with seed capital and the latter are deployed

acceleration capital – an area in which the firm is building strong

momentum. IMQ’s core objective is to provide institutional investors

with access to nimble strategies that are not or are negatively

correlated with equities and that have access to the premium-

return potential often found with young managers. IMQ provides

this in a cost-efficient, transparent and risk-controlled manner.

How does IMQ differentiate itself?“IMQ is one of the only fully independent young-manager (seeding

and acceleration) specialists in Europe. IMQ leverages its seeding

and accelerating position to ensure that the balance of power

between IMQ investors and managers is better aligned to the

interests of institutional investors. We are the first hedge-fund

investment platform to take a pure end-investor approach at all

phases of its investment process. IMQ is also rather uniquely

positioned to provide the hedge-fund component of ‘universal

funds’ or ‘asset-allocation products’ offered by large asset-

management firms.”

What are your views on the seeding landscape?“Capital available to young managers continues to be scarce.

Access to follow-on capital/distribution remains a major challenge,

seed investors: sowing promising partnerships

18

Jeroen Tielman

Lily Pond Howard Kurz is Founder and Chief Executive Officer of Lily Pond,

a New York-based global macro fund established in 2001 that

returned investor capital in 2012. Lily Pond and several of its

previous investors developed an incubator/seeder fund for smaller

and nascent hedge funds in 2013, in order to take advantage of

the current investment environment. This opportunity focuses on

the fact that most current hedge-fund asset growth is directed

towards the largest funds despite the fact that their return profiles

tend to suffer from diminishing returns.

How does Lily Pond differentiate itself?“Much of the incubating/seeding landscape is dominated by large

entities that ultimately make deals with a very small number of

funds that are marketable at the outset. Lily Pond tends to deal

with smaller entities with strong investment processes and

pedigree, and helps them build an institutional presence. We

seek very active involvement with our funds and offer a tailored

investment model that may include all operational facets,

including general management, operations and business-

development support. The extensive experience of our principals

in starting and building hedge funds is also very valuable.”

What are your views on the seeding landscape?“Lily Pond feels that many potentially great funds are being

ignored in the current environment. Almost all post-financial crisis

growth in the hedge-fund industry has been directed towards the

not only for managers setting up their first fund (IMQ operates

here as a seeder) but also for managers that are already operating

(IMQ operates for this category as an accelerator). To increase the

potential for young managers to develop sustainable businesses,

minimum seeding and acceleration tickets are growing in size and

access to strong distribution seems more crucial than ever.

From the perspective of large commercial asset managers and

institutional investors, direct access to young managers provides

better economics, control and governance as compared with

allocating to large hedge funds.”

largest funds, which has not necessarily been to the investor’s

advantage. While it is much more difficult to analyse a smaller or

newer fund, it is ultimately and certainly to an investor’s benefit.”

What kind of strategies are you looking to invest in at what stage?“Lily Pond is open to investing in any strategy and we tend to be

involved at an earlier stage. What is critical is a management

team’s demonstrated expertise in the strategy and the ability to

construct an investment portfolio and manage risk. Lily Pond is

very sensitive to understanding the difference between a strategy

and a trade – the investment process must be replicable and

sustainable.”

What kind of strategies are you looking to invest in and at what stage?“IMQ targets strategies that have no or a very low correlation

with equities. We look for managers who are just starting up or,

increasingly, for managers with a track record of one to three years.

We believe that a suite of unique and complementary strategies

provided by young managers enhances institutional portfolios.”

19

Lyxor Asset ManagementStéphane Enguehard is Head of Funds of Hedge Funds

Development at Lyxor Asset Management, overseeing global

strategic development. Paris-based Lyxor is a subsidiary of

Societe Generale Group and was founded in 1998. Today, Lyxor

employs more than 600 professionals worldwide. Lyxor manages

assets of USD 110.7 billion (31 October 2013) and offers private

and institutional investors leading expertise in all modern

investment techniques: exchange-traded funds and indexing,

alternative investments, structured products, active quantitative

investments and specialised investments.

How does Lyxor differentiate itself?“Lyxor has long-established experience partnering with managers

at different stages of their development. We understand the

challenges and opportunities they face in terms of investment-

opportunity set, operational setup and marketing reach. Lyxor

has previously seeded strategies that have become successful

standalone funds. Our expertise in analysing and replicating

hedge-fund portfolios gives us an edge in understanding manager

potential. Through our managed-accounts platform, Lyxor launched

more than 400 funds and has substantial experience negotiating

investment-management agreements and business terms and

setting investment mandates and limits. Our infrastructure enables

us to bring our negotiating power with counterparties and prime

brokers to seeded managers, with the ultimate goal of generating

structural alpha.”

What are your views on the seeding landscape?“Now is the right time to re-engage in seeding opportunities. After a

post-crisis pause, Lyxor believes it is time to re-enter this segment,

as we see an acceleration of new, high-quality candidates at a

time when seed money is scarce. This presents an opportunity to

negotiate attractive terms for our clients in terms of fee and

performance. On the manager side, Lyxor actively hunts for

individual candidates who could form part of an early-stage

segment on our managed-accounts platform. On the investor

side, we are seeing interest from pension funds and family offices

for less-liquid alternative investments and naturally, seeding is

appealing to them.”

What kind of strategies are you looking to invest in at what stage?“Lyxor considers early-stage investing on a day-one basis. We

funded Melanion Capital in 2013, which manages an innovative

niche strategy focused on dividend arbitrage. We would also

consider acceleration deals enabling a manager with USD 30 to

50 million under management to grow to USD 100 million. For our

managed-accounts platform, we seek innovative strategies that

complement our current offer, with a view to enhancing and

differentiating our investment universe. In launching a seeder

fund-of-funds project, we always consider a diverse set of strategies.

Beyond investment strategies themselves, core criteria of our

selection process are the quality and past achievements of the

investment teams as well as proven entrepreneurial spirit.”

Seed investors20

Stéphane Enguehard

20

NewAlpha Asset Management Philippe Paquet is Deputy Chief Executive Officer of Paris-based

NewAlpha Asset Management, which provides institutional investors

access to talented, emerging asset managers. Founded in 2003,

NewAlpha has completed 29 strategic seeding partnerships and

invested a total of USD 900 million in seed or acceleration capital

with investment managers worldwide, who now manage more

than USD 3.8 billion in assets. NewAlpha AM is among the most-

active incubators, with more than USD 400 million in seed capital

deployed over the past two years. In 2013, NewAlpha merged with

La Francaise AM’s emerging-managers seeding unit, NExT AM,

creating Europe’s largest incubator, with USD 9 billion in global

assets managed by partnering investment managers.

How does NewAlpha differentiate itself?“NewAlpha is the only ‘pure play’ in hedge-fund seeding with

significant experience and a proven track record. We have been

exclusively seeding emerging managers for more than ten years,

without conducting any other multi-management business. This

focus – along with the absence of conflicts of interests – is highly

appreciated by NewAlpha investors and managers.”

What are your views on the seeding landscape?“The number of new fund launches decreased in 2013, while the

average launch size and the number of launches supported by

seed investors have both significantly increased. This reflects the

growing importance of seed investors in the value creation of this

industry. Meanwhile, sophisticated and long-term investors are

increasingly asserting their interest in diversifying their investment

managers and strategies, and therefore, developing interest in

early-stage managers and new funds. However, such investors

acknowledge that developing successful expertise in sourcing and

assessing emerging managers requires experience and resources.

This is why NewAlpha is very optimistic about its business.”

What kind of strategies are you looking to invest in and at what stage?“Aside from specific investor mandates, NewAlpha has a fully

opportunistic approach for selecting and investing with emerging

managers. We believe that successful hedge-fund seeding is

based on a subtle balance between the following complementary

perspectives: investment and risk management, operational setup,

business development-potential and entrepreneurial capabilities.

Consequently, there are numerous criteria for assessing and

selecting early-stage managers; therefore, restricting any search

from the strategy perspective is not relevant.”

21

Philippe Paquet

trade of the day

Strategies for capitalising on corporate developments are always newsworthy and include event-driven

arbitrage, merger arbitrage in Europe and special or distressed situations.Three world-class managers

seasoned in this space share there current favourite trades and why they are playing them.

Jim HoffmanPaulson & Co. Inc“While spreads remain tight in plain-vanilla deals, complex deal

structures, competitive bids and pre-announced deals can be

attractive in consolidating industries. Examples can be seen in

the maturing global telecom/wireless industry. Some recent

US mergers include T-Mobile’s merger with MetroPCS; AT&T’s

acquisition of Leap, and Sprint’s purchase of Clearwire. European

examples include Vodafone’s acquisition of Kabel Deutschland, KPN’s

sale of E-Plus to Telefonica Deutschland, and a potential bid by AT&T

for Vodafone. By acquiring stakes in targets prior to bids (MetroPCS,

T-Mobile, Leap, Vodafone, Kabel), taking weighted positions in

targets after the mergers were announced but prior to competitive

bids (Sprint, Clearwire), and arbitraging complex spreads (KPN/

Telefonica), I have been able to achieve high returns in merger

arbitrage in an otherwise low plain-vanilla spread environment.”

Omar SayedP. Schoenfeld Asset Management LP “I am also excited about consolidation and restructuring opportunities

within European telecom. A lack of infrastructure investment as a

result of low prices caused both by unbundling and higher relative

spectrum costs is hurting European competitiveness as we move

into an age of broader digitisation. To increase investments, the

European Union is looking at legislative changes that may spur

EU-wide consolidation and lower spectrum costs while furthering

in-market consolidation. There are a number of current examples

of telecom restructuring and consolidation in Europe, and the KPN

merger between its German subsidiary and Telefonica Deutschland

22

is, in fact, a good example of in-market consolidation. Another

example is Vivendi’s spinning off SFR, which I believe will also play

a role in in-market consolidation.”

Galia VelimukhametovaGLG Partners, Inc. “I currently see interesting opportunities in the debt and equity of

shipping companies. Following overly aggressive fleet expansion

and a prolonged period of subdued rates, a further downside in

rates and asset values is limited and we see improving conditions

in some parts of the market. Meanwhile, many of the European

banks, which have significant involvement (approximately 75% of

the nearly USD 450 billion in global shipping loans, according to

some estimates) are still looking to reduce or are being forced to

sell. What I find particularly attractive are debt and equity

securities of the companies that are respective leaders in their

segment (for example, CMA-CGM in containers, or Frederiksen-

owned assets in tankers) as well as loans collateralised by hard

assets trading at low cash prices.”

James (Jim) D. Hoffman is Managing Director and Partner

of Paulson & Co. Inc. He focuses on global M&A and event

arbitrage and co-manages the firm’s merger funds. Paulson &

Co., founded in 1994 and based in New York, specialises in

event-driven arbitrage strategies, including merger arbitrage,

bankruptcy reorganisations and distressed credit, structured

credit, recapitalisations, restructurings, and other corporate events.

Omar Sayed is Portfolio Manager Asian & European Equities at

P. Schoenfeld Asset Management LP (PSAM). Founded in 1997

and based in London and New York, PSAM researches,

analyses and invests in corporate events that may alter an

organisation’s control, capital structure, or corporate strategy.

PSAM focuses on three main strategies: special -situations

investments, merger arbitrage and distressed/stressed credit

opportunities.

Galia Velimukhametova is Head of Credit & Distressed

Investments at GLG Partners, Inc. A London-based global

investment manager, GLG is a wholly owned subsidiary of British

alternative-investment manager Man plc. GLG is specialised in

absolute-return and long-only equity, credit and convertibles,

distressed/stressed credit, macro and relative-value investment

strategies across asset classes, sectors and geographies.

23

bull or bearin the year of the horse?

risky, including most equities, I am generally bullish, particularly

regarding those in developed markets. I am similarly bullish regarding

certain distressed investments and European sovereign debt. The

corollary would be that I am generally not constructive on highly

rated sovereign debt. In terms of currencies, my view varies

depending on the particular currency, so it is difficult to generalise

about this asset class. I am generally not bullish on commodities.”

Gianmarco Mondani

GAM Investment Management

“At the start of each of the last four years,

analysts have forecasted European earnings

growth above 10%. However, these outlooks

were revised down over the course of each

year to 0% or negative because the low

economic-growth environment did not allow

for much more. This could very well happen again in 2014 as

current MSCI Europe Consensus EPS estimates of 12% growth

in Europe seem too high. However, the market could continue

to re-rate even in the absence of earnings growth, as was the

case in the past two years. I believe that market appreciation will

be muted (mid-single digit) as current valuations are high and the

long period during which interests rates kept falling has ceased

following the US Federal Reserve’s tapering decision. Therefore,

the opportunity for returns lies more in distinguishing between

winners and losers rather than buying the market per se.”

As the seventh sign in the Chinese zodiac, the horse is associated with strength, momentum, growth

and dynamism. So it is perhaps not surprising that 2014 is projected to be promising from a global

economic perspective, with 3.7% growth according to ABN AMRO estimates*. Harnessing this

potential will require decisiveness, another equine attribute. Here, three alternative-investment fund

managers discuss investment approaches, forecasts and fund positioning in the year of the horse.

Are you currently bullish or bearish?

Gertjan Koomen

Sothic Capital

“Sothic’s portfolio focuses on European

corporate event and distressed situations,

with returns largely correlated to the success

of idiosyncratic events rather than generic

market returns. I am bullish on the opportunity set available for our

strategy. In the last few months, we have seen encouraging signs

of movement towards a traditional distressed environment.

Although eurozone growth forecasts remain subdued, the bloc is

economically stable and provides a more-investable environment.

The sovereign-debt situation has been contained, so there is less

tail risk now than a couple of years ago. The huge deleveraging

required by European banks has been well documented and the

banking system is too large and insufficiently capitalised. Elevated

default levels already exist, and distressed ratios in the bank-loan

space and bank capital have improved markedly since the crisis,

resulting in an enhanced ability for banks to shoulder losses.

I expect to see compelling buying potential in the bank-loan space.”

Marc Mezvinsky

Eaglevale Partners LP

“My current outlook varies based on the particular asset class.

Additionally, whether one is bullish or bearish generally depends

upon one’s perspective based on which side of the trade one is

on. With respect to assets that I generally consider to be more

* AA Economic Bureau research, 6 January 2014

24

What opportunities and challenges do you foresee this year?

Gertjan Koomen:

“I expect to see significant opportunity in the European corporate

sector, where leverage ratios are substantially higher than the previous

cycle and where there has been a marked increase in non-performing

corporate loans since the crisis. Furthermore, default rates are

forecasted to remain elevated. There is a meaningful amount of

leveraged loans and high-yield bonds to be refinanced by the end

of 2016 and a significant proportion of these loans start maturing

next year. This greater supply also coincides with lower demand, as

bank participation in the leveraged-loan market is expected to fall to

meet regulatory requirements and European CLO (collateralised

loan obligation) market investment capacity is decreasing.”

Marc Mezvinsky:

“My view regarding the major risks in financial markets in the

intermediate term include: a gulf between US Federal Reserve

strategy for reducing monetary stimulus and market expectations

about this strategy; a reheating of the European sovereign monetary

and debt crisis; a precipitous slowdown in Chinese economic activity;

and a host of potentially destabilising political events in certain

emerging markets (including the Middle East and China). On a

longer-term basis, I am concerned about the political stability of

certain developed countries, particularly in light of employment

conditions and the potential for inflation given the prevailing,

unprecedented monetary stimulus.”

Gianmarco Mondani:

“The continuous spread between equity winners and losers creates

opportunities for active managers. The market handsomely rewards

companies that can deliver positive earnings and surprises in a

low-growth environment, and punishes those whose earnings

cannot escape the general economic gloom. In this respect, a

long/short non-directional approach based on earnings revisions

can continue to generate returns. Regarding risks, renewed

discussion about the sustainability of the euro, or reluctance to

stem social unrest in peripheral Europe with accommodative

monetary and fiscal policy, could reintroduce uncertainty.”

Where do you want to position your fund in 2014?

Gertjan Koomen:

“Sothic’s portfolio is more long-biased and directional than it was

in 2013. I expect much of the attribution to come from post-reorg

debt and equity situations on the long side. There are other long

opportunities in pre-reorg debt positions where, for example,

debt-for-equity refinancing has yet to occur. On the short side, we

see opportunities both in high-yield (as a result of the exponential

increase in European high-yield issuance over the last few years)

and in pre-reorg debt, as well as in equity shorts, where we believe

equity will be wiped out as part of a balance-sheet refinancing.”

Marc Mezvinsky:

“Without providing specific information regarding the fund that

Eaglevale manages, I have a favourable market view of equity

25

investments in developed markets, particularly in Japan, the

United States, and Europe. In Europe, I am particularly bullish

on distressed equity and debt securities as I believe that certain

markets present highly convex investment opportunities. With

respect to currencies, I believe that the Japanese yen may provide

a compelling investment opportunity in 2014 and that the US

dollar may come back into favour due to the US Federal Reserve’s

moderating quantitative-easing programme. Regarding fixed

income, I am also carefully evaluating the G10 sovereign-debt

markets because monetary stimulus may dissipate in certain

markets (excluding Japan), which would continue to exert

pressure on bonds in those markets.”

Gertjan Koomen is Managing Partner and Chief Investment

Officer of Sothic Capital, in London. The firm’s main activities

are distressed investing, opportunistic credit and event-driven

investments, with a focus on single-name European corporates.

Sothic’s investment strategy revolves around exploiting perceived

inefficiencies, whether informational, structural, procedural or

market-driven

Marc Mezvinsky is Co-Founder of Eaglevale Partners LP, an

alternative asset manager based in New York. Eaglevale

employs a discretionary global macro investment strategy and

seeks to achieve attractive, risk-adjusted absolute returns,

investing both in developed and emerging markets via global

currency, fixed-income, equity, and commodity instruments.

Gianmarco Mondani is Founding Partner, Chief Executive Officer

and Chief Investment Officer of Lugano-based GAM Investment

Management, which manages client assets of more than USD 2

billion (31 July 2013). GAM’s strategy is equity long/short with a

non-directional approach focusing mainly on developed

European markets.

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Bull or bear?

Gianmarco Mondani:

“GAM Talentum is an equity long/short fund positioned in a non-

directional fashion. Our long book is exposed to many structural

growth stories and some recent self-help turn-around cases.

I think that consensus estimates for this group of stocks (+17%)

can be exceeded, while the fund trades on average market multiples.

Our short book is exposed to many companies with deep structural

problems or more-recent incidental challenges. This means that

market expectations for this group of stocks of 27% growth are

likely to be disappointed. Yet these stocks also trade on average

market multiples. Therefore, I believe the difference between

the performance of our long and short book should be material.”

26

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derivatives, commodities, currencies, and more. We deliver

technical solutions for our clients and facilitate prompt, efficient

and cost-effective connection to markets.

▶ Global fix engine

▶ Open architecture

▶ 37 data centres in ten locations

▶ More than 48 exchanges

▶ More than 100 multilateral trading facilities (MTFs) and

electronic crossings networks

▶ 24-hour futures voice execution

▶ Co-location and proximity services

Global coverageOur dedicated offices in the Americas, Europe and

Asia-Pacific cover all major financial, commodity and

energy markets. We maintain direct membership in

central counterparties, exchanges, central securities depositories,

and where practical, via selected third parties. We are a multi-

asset-class clearer of listed and over-the-counter (OTC) central

counterparty (CCP)-cleared to non-CCP-cleared products.

▶ 11 offices

▶ More than 170 exchanges, MTFs and dark pools

▶ Ten direct central securities depository connections

ABN AMRO Clearing – a wholly owned subsidiary of ABN AMRO – is a leading global provider of

clearing and financing services for alternative-investment managers, specifically for trading strategies

including multi-assets arbitrage (volatility, statistical, risk), CTA, relative value and (long/short) equities.

Global coverage

Reporting & Technology

GRIP

Risk management & Financing

Stock Borrowing & Lending

Capital introduction

Client Stability

Partner ship

Global Execution

Operational Excellence

Technology

People

Process

Global coverage

Reporting & Technology

GRIP

Risk management & Financing

Stock Borrowing & Lending

Capital introduction

Client Stability

Partner ship

Global Execution

Operational Excellence

Technology

People

Process

27

Reporting & technologyOur cutting-edge IT is fully geared towards

efficiency and client satisfaction. Our reporting

portal provides flexible access to trades, positions,

cash movements and more, all in flexible formats. It targets

straight-through processing and computer-to-computer

communication, leading to efficiency gains for onward processing

of data in client back-office systems.

▶ Global reporting portal

▶ Flexible XML, CSV, PDF, XLS formats

▶ Customised reports

▶ Historical data

▶ Real-time allocation tool

Capital introductionSupporting and nurturing our clients has been integral

to our success over time. Our Cap Intro team aims

to help fund managers raise capital by leveraging

ABN AMRO Clearing relationships with institutional investors,

and also support them with their sales and marketing.

▶ Fund-of-hedge funds

▶ Pension funds

▶ Family offices

▶ Private Wealth Management

▶ Private Banking

Client stabilityWe are recognised for the quality and intimacy

of our client relationships, as well as for our stable

management and strategy. We continuously

strive to innovate, listen and support our clients’ growth plans and

stability. This trusted relationship has resulted in a high rate of

client referrals to peers.

▶ High client satisfaction

▶ Award-winning client services

▶ 80% of clients recommend our services

▶ Client care

▶ Equities, warrants, exchange-traded funds, fixed income,

emissions

▶ FX, contracts for difference, interest-rate swaps, derivatives,

energy, commodities

Risk management & financingOur proven correlation-haircut risk-management

system offsets risk across products (listed and OTC)

and markets within a client portfolio. This facilitates

an optimised amount of collateral while financing initial margins

with CCPs, bringing flexibility and security and provides our clients

additional leverage.

▶ Value-at-risk margining

▶ Cross-product margining

▶ Margin financing

▶ Leveraged financing

Stock borrowing & lendingWe have been servicing highly demanding market

makers for 30 years. Stock-lending programs from

institutional investors using our custody services

have positioned us as a leading counterparty for securities

borrowing and lending.

▶ Shark II: locate tool

▶ Auto-borrowing programs

▶ Deep liquidity pool

Operational excellenceOur model has been developed over time and

aims to deliver operational excellence, scalability

and efficiency. Our proprietary back-office system

is geared towards high-volume processing,

enabling management of centrally cleared as well as OTC

products on all markets. This system delivers proven reliability,

managing an average of 16 million transactions per day and

spikes in excess of 20 million transactions.

▶ More than 2 billion transactions per year

▶ Daily peaks of 16 million transactions

▶ Top clearer on Eurex and Euronext Liffe

Global coverage

Reporting & Technology

GRIP

Risk management & Financing

Stock Borrowing & Lending

Capital introduction

Client Stability

Partner ship

Global Execution

Operational Excellence

Technology

People

Process

Global coverage

Reporting & Technology

GRIP

Risk management & Financing

Stock Borrowing & Lending

Capital introduction

Client Stability

Partner ship

Global Execution

Operational Excellence

Technology

People

Process

Global coverage

Reporting & Technology

GRIP

Risk management & Financing

Stock Borrowing & Lending

Capital introduction

Client Stability

Partner ship

Global Execution

Operational Excellence

Technology

People

Process

Global coverage

Reporting & Technology

GRIP

Risk management & Financing

Stock Borrowing & Lending

Capital introduction

Client Stability

Partner ship

Global Execution

Operational Excellence

Technology

People

Process

Global coverage

Reporting & Technology

GRIP

Risk management & Financing

Stock Borrowing & Lending

Capital introduction

Client Stability

Partner ship

Global Execution

Operational Excellence

Technology

People

Process

Global coverage

Reporting & Technology

GRIP

Risk management & Financing

Stock Borrowing & Lending

Capital introduction

Client Stability

Partner ship

Global Execution

Operational Excellence

Technology

People

Process

Prime clearing services 28

prime servicesfinancing

globalclient focused

commodities

Professional investors

leading

hedge fundscross assets

energy

equities

Regulations

partnership

secure

proactiveopen architecture

technology

global coverage

global execution

award winning

FX

leveragespecialists

fixed income

risk managementasset protection

experienced staff

passionate

OTC derivatives

29

agenda Amsterdam Investor Forum

12 February 2014

08:45 am Registration

09:30 am Welcome & Opening by the Chairman

Chairman:

Mr Marc de Kloe (Head Funds & Alternative Investments of ABN AMRO Private Banking)

09:45 am Keynote speaker: Mr Stuart Fiertz (Co-Founder, President and Director of Research at Cheyne Capital Management)

10:15 am Investing with a Fund of Hedge Funds – are there opportunities in Europe?

Moderator:

Mr Andy Fisch (CIO Hedge Fund of Funds Group at SSARIS Advisors)

Panellists:

Mr Gertjan Koomen (CIO & Managing Partner of Sothic Capital)

Mr Marc Mezvinsky (Co-Founder of Eaglevale Partners)

Mr Gianmarco Mondani (CIO of GAM Investment Management, Lugano)

11:00 am Coffee & Networking break

11:30 am Seed Investors: A short introduction... what are they looking for nowadays?

Moderator:

Mr Clayton Heijman (Director, Privium Fund Management)

Panellists:

Mr Howard Kurz (CEO of Lily Pond Capital)

Mr Stéphane Enguehard (Head of Development – Funds of Hedge Funds at Lyxor Asset Management)

Mr Philippe Paquet (Deputy CEO of NewAlpha Asset Management)

Mr Jeroen Tielman (CEO of IMQubator)

12:00 pm The AIF Factor – Six finalist pitches to be judged by audience and seeders

12:45 pm Lunch & Networking Break

1:45 pm Breakout session I: Tail-hedging/Volatility Arbitrage

Moderator:

Mr Andrew Rozanov (Managing Director at Permal)

Panellists:

Ms Maya Rodriguez (Head of Sales & Investor Relations at 36 South Capital Advisors)

Mr Bernard Kalfon (Head of Volatility Strategies & Solutions at UBP Alternative Investments)

Mr Brandon Yarckin (Investor Relations of Universa Investments)

Mr Jeroen van Bezooijen (Product Manager at PIMCO)

30

Breakout session II: A deep dive into Quant/Systematic Strategies – how do they work and why invest in them?

Moderator:

Mr Mark Baak (Director at Privium Fund Management)

Panellists:

Mr Sven Bouman (CEO and Founder of Saemor Capital)

Dr Yves Balcer PhD (Founder of FORT LP Funds)

Mr Jasper Anderluh (Director of HIQ Invest)

Mr Dennis Lohfert (CIO of ION Asset Architecture)

2:30 pm Fund of hedge funds – Alpha hunters or asset gatherers: Strategies for growth?

Moderator:

Ms Niki Natarajan (Editor at InvestHedge)

Panellists:

Mr Max von Bismarck (Partner and CEO – Europe of Skybridge Capital)

Mr Alexandre Col (Group Head of Multi-management and Asset Management within

Banque Privée Edmond de Rothschild)

Mr Christopher Fawcett (Senior Investment Officer at Permal)

Mr Arie Assayag (CEO of UBP Alternative Investments)

3:15 pm Coffee & Networking

3:45 pm Sound bites Around the World: Views and perspectives from a mid-sized fund of hedge funds

Mr Kevin Gundle (Founding Member of Aurum Fund Management Ltd)

4:15 pm Sound bites Around the World: Regulatory Changes (AIFMD)

Mr Dominic Hobson (Founder of COO Connect) interviews Mr Jerome Lussan (CEO of Laven Partners)

4:45 pm Trade of the Day: ...some trading ideas in Merger Arbitrage and Special Situations

Moderator:

Mr Michiel Meeuwissen (Senior Portfolio Manager Funds of Hedge Funds – Kempen Capital Management)

Panellists:

Mr Omar Sayed (Portfolio Manager Asian and European Equity at P Schoenfeld Asset Management)

Mr Jim Hoffman (Managing Director and Partner of Paulson & Co.)

Ms Galia Velimukhametova (Head of Credit & Distressed Investments at GLG Partners)

5:30 pm Closing drinks and reception

ABN AMRO Headquarters

Auditorium

Gustav Mahlerlaan 10

1082 PP Amsterdam

The Netherlands

abnamroclearing.com

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abnamroclearing.com