2. Regional Investor Overview
Americas Nuvest Capital
Northeast (New York, Connecticut & Massachusetts)
As the center of the financial industry, New York houses the
largest number of institutional hedge fund investors in the
world.
The largest percentage of investors are name-brand fund of
funds based in New York and the surrounding areas, but there
is also a healthy mix of old and new family offices, pensions,
endowments and foundations that each allocate directly lo
hedge funds.
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3. Regional Investor Overview
Americas Nuvest Capital
Connecticut is home to a half dozen established, multi-
billion dollar fund of funds, including some of the world`s
largest, UBS Alternative Investment Solutions and K2.
Most investors, including GE's corporate pension and the
Common Fund, sit in the southern part of the state.
Further north, in New Haven and Hartford, there are a few
notable end-allocators including Yale University’s
endowment, the University of Connecticut Foundation, and
insurer Aetna.
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4. Regional Investor Overview
Americas Nuvest Capital
Boston is home to several leading endowments (MIT,
Harvard, Tufts) and major consultants(NEPC, Meketa and
Cambridge). On the non-institutional side, Boston also
includes a good number of multi—family offices and
advisors.
Which together make up the largest group of investors by
number. There are a few direct allocating pension investors
in the region as well. But we have not seen these group
active in making new allocations and /or meeting with new
managers.
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5. Regional Investor Overview
Americas Nuvest Capital
Appetite in the region is strongest in the Boston region for
Equity L/S and fundamentally based managers. There is
some bias toward independent boutique firms as opposed
to larger asset managers. Boston investors are also very
sophisticated and have been investing in the emerging
markets for an extensive period of time.
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6. Regional Investor Overview
Americas Nuvest Capital
Mid-Atlantic (Pennsylvania, Washington D.C. ,
Virginia & NC)
The bulk of allocators based in Virginia have ties to UVIMCO
(University of Virginia's endowment) or VRS (Virginia
Retirement System). As a result, these investors display very
similar investment views and strategy preferences. VA
investors have a long history of investing in Equity L/S and
biased toward fundamental strategies.
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7. Regional Investor Overview
Americas Nuvest Capital
Historically these investors have approached emerging
markets through traditional long only or equity L/S
managers. In addition to UVIMCO, VRS and Spider
Management (U. of Richmond’s Endowment).
There are several outsourced CIOs that manage portfolios
for smaller endowments, foundations, and pensions,
including investures and Cornerstone. The remaining
investors are a mix of high quality family office investors
and boutique Fund of Funds.
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8. Regional Investor Overview
Americas Nuvest Capital
Washington also has a number of smaller endowments and
foundations with direct HF allocations, but with smaller
portfolios and are less active in their allocations (Brookings
Institute Georgetown, George Washington. American Red
Cross, Smithsonian and Howard Hughes.) Some notable
pensions in the area include Lockheed Martin, National Rail,
and World Bank Pension, who are all opportunistic and active
in alternatives.
Washington D.C. is predominately comprised of institutional
end investors, several of which have ties in World Bank
Pension. (KAUST, Strategic Investment Group and Rock
Creek).
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9. Regional Investor Overview
Americas Nuvest Capital
Philadelphia has a handful of high quality institutional FOFs
(Morgan Stanley AIP, Altalus, SEI), several direct institutions
(U Penn, Ascension Health, and Haverford) and a large
presence of smaller family offices and wealth advisors.
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10. Regional Investor Overview
Americas Nuvest Capital
North Carolina has a mix of endowments, outsourced ClO's,
and Fund of Funds which all have ties to UNC (University of
North Carolina) and Duke.
Additional endowment allocators in the area include Davidson,
Wake Forest, Global Endowment Management (outsourced
CIO founded by ex Duke CIO) and Morgan Creek (a large FOF
established by the former UNC team with endowment
investors). These investors have exposure to emerging markets
through a variety of vehicles, both public and private.
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11. Regional Investor Overview
Americas Nuvest Capital
West Coast (California & Pacific Northwest)
The California hedge fund investor network is split between
the Northern and Southern parts of the state. The most active
state and local pension plans are in Sacramento: Calipers and
Sacramento County Employees Retirement Plan. Both plans
work closely with their consultants (UBS and Cliffwater,
respectively) but also source and conduct investment and
operational due diligence on their own.
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12. Regional Investor Overview
Americas Nuvest Capital
The San Francisco Bay Area plays host to a group of
institutional investors, including university endowments such
as Stanford, UC Regents and Berkeley, and other institutional
FOFs. The active foundations and local pensions are The
William & Flora Hewlett Foundation, Gordon E. & Betty I.
Moore Foundation and City of San Jose.
Palo Alto, located one hour south of San Francisco has a few
significant family offices: CM Capital (Cha Family). Oakhill
Investments Management (Robert Bass Family) and Capricorn
Management LLC (eBay Family) and Meritage (Jim Simons,
Renaissance Tech).
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13. Regional Investor Overview
Americas Nuvest Capital
Southern California has the states largest fund of funds in
Pacific Alternative Asset Management Company (PAAMCO)
Local university endowments include; California Institute of
Technology and the University of Southern California there are
other notable family offices/foundations active in alternatives
including MIG Absolute Return LLC (Paul Mirage Family),
Broad Family Office (Eli Broad Family) Hilton Foundation and
the J. Paul Getty Trust.
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14. Regional Investor Overview
Americas Nuvest Capital
The institutional nature of the region, coupled with the need for
large capacity, creates strong demand for institutional
managers with high quality pedigree.
The Pacific Northwest is home to several institutional investors,
a few endowments/foundations and prominent family offices.
A few examples of these investors are Bill & Melinda Gates
Foundation, Weyerhaeuser, Vulcan Capital, University of
Seattle to name a few. Traditionally, the PNW has had a bent
towards managers in the credit, multi-strat or FI space. These
investors are not big conference goers and gel most of their deal
flow through capital introduction or through word of mouth
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15. Regional Investor Overview
Americas Nuvest Capital
The investment community in Seattle is a very tight knit group
and they share ideas frequently with each other through the
Seattle Alterative Investment Board. Lastly, we have noted over
the years that this area is very fee sensitive and the investors in
the area do not respond well to products that are highly levered.
Several investors from this region have made the trip to Asia or
Latin America and are highly interested in Emerging Markets.
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16. Regional Investor Overview
Americas Nuvest Capital
The other area with a higher concentration of alternative
investors/consultants in the PNW is Portland, Oregon.
Portland is home to investors and consultants like; RV Kuhns.
Oregon State Investment Board, CTC Consulting and Common
Sense Investment Management.
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17. Regional Investor Overview
Americas Nuvest Capital
Oregon State Investment Board and many others have started
to go direct to HFs and actually have hired a head of
alternatives to disintermediate their exiting FoF book. Again,
these groups don't traditionally see much deal flow.
We are one of the few cap intro teams to service this region on
a regular basis. The investors in this area tend to like bigger
brand names or new managers with quality pedigree. There
has not been much discussion from these groups about EM.
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18. Regional Investor Overview
Americas Nuvest Capital
Midwest (Chicago, Ohio & Missouri)
The Illinois hedge fund investor base is centered in Chicago, and
is considered to be among the most experienced allocator
communities in the US. The major investor groups are
institutional fund of funds, followed by foundations,
endowments and family offices.
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19. Regional Investor Overview
Americas Nuvest Capital
Grosvenor Capital Management, the 5'” largest hedge fund of
funds manager in the world with approximately $758 in assets
under management, together with Mesirow Advanced Strategies
and Aurora Investment Management. which run $14 billion and
$11 billion, respectively, are major investors in L/S equity, and
are particularly focused on pedigreed managers with renewed
capacity.
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20. Regional Investor Overview
Americas Nuvest Capital
There are also several large managed account platforms which
invest globally across strategies There are several $1- $5 billion
Fund of Funds in the region as well.
Chicago is also home to a number of family offices and major US
foundations that invest in hedge funds, including the Prttzxer
and MacArthur Families, as well as the University of Chicago
and Northwestern.
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21. Regional Investor Overview
Americas Nuvest Capital
Many of these sophisticated investors continue to look for
pedigreed Asian and EM managers. Wisconsin has 3 large
allocators who are active/becoming active in hedge funds in
the State of Wisconsin Investment Board ("SWlB"), the
University of Wisconsin Endowment and Wisconsin
Alumni Research Foundation ("WARF").
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22. Regional Investor Overview
Americas Nuvest Capital
Missouri and Ohio both contain a mix of Public Pensions,
Endowments, Foundations and Consultants. Public School
Retirement System of Missouri ("MOPERS"),.
Missouri State Employees Retirement System ("MOSERS"),
Ohio Public Employees Retirement System ("OPERS"), The
Ohio State University, and Washington University are some of
the prominent investors in the region, although some are
further along the direct investing curve than others.
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23. Regional Investor Overview
Americas Nuvest Capital
Southeast (Texas & Florida)
The Texas hedge fund investor community is primarily split
between two major cities, Austin and Dallas, with large public
institutions located in the state capital (Austin) and prominent
family offices located in the business capital (Dallas-Ft.Worth).
Houston, the state's largest city, has fewer hedge fund
investors.
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24. Regional Investor Overview
Americas Nuvest Capital
Austin is home to some of the largest direct public hedge fund
allocators in the United States. including four pension funds
Teachers Retirement System of Texas Teachers ("Texas
Teachers" or "TRS°’), Texas County and District Retirement
System (TCDRS), Texas Treasury Safekeeping Trust Company
("Texas Trust"). and Employees Retirement System of Texas.
(ERS), which announced it would be going direct in 2012.
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25. Regional Investor Overview
Americas Nuvest Capital
ln addition, the University of Texas Investment Management
Company ("UTIMCO"), the largest public university
endowment in the US, allocates directly to hedge funds. (Texas
Permanent School Fund, which is often described as a
sovereign wealth fund. allocates through fund ol funds, but is
current reconsidering that policy.)
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26. Regional Investor Overview
Americas Nuvest Capital
While all of these institutions have relationships with pension
fund consultants. most have staff equipped to handle manager
sourcing and investment due diligence directly. All of these
investors invest solely in the institutional quality, pedigreed
managers and their portfolios have global exposure in both
equities and credit.
(The same can be said for the major private hedge fund
investor in Austin, Perella Weinberg, which runs a fund of
funds business that incorporates an outsourced CIO platform.)
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27. Regional Investor Overview
Americas Nuvest Capital
Dallas, on the other hand, is populated with smaller, private
family offices that have been long-time hedge fund
investors. As many of these FOs are familiar to each other,
managers can leverage this community by meeting with the
notable groups and Benefitting from word-of-mouth.
The Dallas FO community includes various firms tied to
multigenerational dynasties, such as Crow, Hunt and Bass
(in Ft. Worth).
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28. Regional Investor Overview
Americas Nuvest Capital
They have historically invested in pedigreed L/S equity and
credit managers, but also have an appetite for high profile
launches. Dallas is also home to AT&T's pension fund, one
of the largest corporate pensions in the world and a direct
hedge fund allocator.
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29. Regional Investor Overview
Americas Nuvest Capital
The nearby Ft. Worth community includes Crestline, the
Bass-founded institutional fund of funds, as well as three
institutions that directly allocate to hedge funds, Cook
Children's Health Care System. Employee Retirement Fund
of the City of Ft. Worth and the endowment of Texas
Christian University ("TCU").
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30. Regional Investor Overview
Americas Nuvest Capital
Houston’s investor base is primarily high-net worth that invest
via small multi-family offices. The hedge fund investor
community is significantly smaller in number than Austin and
Dallas.
There are two major private players: fund of funds Salient
Partners and Covariance Capital, an outsourced CIO seeded by
TIAA-CREF. The endowment of the University of Houston
System, a public university, also invests directly.
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31. Regional Investor Overview
Americas Nuvest Capital
It should be noted that Texas has several private college
endowments that invest directly in hedge funds, and they are
generally accessible through their consultants. In addition to
TCU in Ft. Worth, the list includes Southern Methodist
University(in Dallas), Rice University (in Houston) and Baylor
University (in Lubbock).
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32. Regional Investor Overview
Americas Nuvest Capital
The Florida Investment community is split between the
Northern institutions (Alfred l. DuPont Trust, Florida State
Board and (UFICO) and the Southern Florida Family Office
Community. Pre 2008 there was more investors in Florida,
but many were hurt by Madoff exposure.
Currently the larger investors in Southern Florida are
Genspring, CV Advisors, Forrestal, Gamma and Collins.
Most of these investors will look across strategies, but tend
to make smaller initial investments.
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33. Regional Investor Overview
Americas Nuvest Capital
Canada
The Canadian investor landscape is primarily split between two
cities. Montreal and Toronto, with a handful of investors
coated in other cities like Ottawa, Bedford. Quebec, Vancouver
and Sainte-Foy. We believe out of 30435 allocators in Canada
only 26 currently have money to put to work.
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34. Regional Investor Overview
Americas Nuvest Capital
There is a heavy concentration of pension plans and
endowments in Canada. While most of the investor groups
have in-house teams, they also utilize outside consultants
(notable names being Albourne and Mercer/Hammond).
Overall, Canadian investors tend to be highly "sticky," though
they tend to be slower to make investment decisions (13
months or more).
Active institutional allocators in the region include: Ontario
Municipal Employees Retirement System, Ontario Teachers,
CPPIB, University of Toronto, CN Rail Caisse de Depot,
Canadian Pension Plan, BIMCOR and McGill University.
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35. Regional Investor Overview
Americas Nuvest Capital
Investors in Canada have a strong focus on absolute returns
rather than relative returns and most are still restructuring
portfolios post the crisis of '08. Some groups who were heavily
invested in FoFs are now in the process investing directly with
managers, increasing the demand for product in the region.
Canadian investors generally invest in funds where they believe
that the organization is strong overall, with particular
emphasis placed on infrastructure and risk management
systems.
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36. Regional Investor Overview
Americas Nuvest Capital
Canadian investors are also extremely focused on creating
partnerships and tend to like founders share classes. ln regard
to strategy, Canadian investors are interested in Fi RV. Credit,
Multi-strat and Emerging Market names.
Unlike many other regions in North America, institutional
investors in this region will look at and invest in day one
managers
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37. Regional Investor Overview
Americas Nuvest Capital
Brazil
The Brazilian investor landscape is predominately split
between Rio de Janeiro and Sao Paulo. Sao Paulo tends to
house more "institutional" type investors such as FoFs,
Consultants and Advisors, Private Banks and to a lesser
extent, family offices.
Rio de Janeiro has a much higher concentration of family
offices, ultra high net worth's and a handful of FOFs. in
our estimation, Brazilian investors make up $1.1 trillion in
assets overall.
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38. Regional Investor Overview
Americas Nuvest Capital
Historically, Brazil was a difficult place to extract capital
due to the fact that the country‘s base-rate of return (LD!
Rate) had been as high as l5%, making it a fairly closed off
economy. Interest rates crowded out the market and made
money market funds very popular providing a high risk·free
rate of return.
Five years ago Brazil started investing in equities and today
many investors in the region are exceptionally bullish on
finding high-quality "stock-pickers" in the form of LS
equity to generate consistent alpha going forward.
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39. Regional Investor Overview
Americas Nuvest Capital
Most CIOs we work with have a clear idea of their asset
allocation models and focused on reducing their traditional
concentration to federal securities and diversifying away from
fixed income toward equity investments Many have
approached US .based managers (as opposed to EU/Asia
managers) for ease of due diligence and monitoring.
Under the Brazilian regulatory regime, allocators (not
managers) bear responsibility for the clients investment The
risk appetite is, therefore, low for non "vanilla" product.
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40. Regional Investor Overview
Americas Nuvest Capital
These allocators also require a direct line to the portfolio
manager and lack of access is usually a non-starter for
Brazilian investors. Because they require access to the PM at all
times, large conglomerates with multiple layers of
management are generally not of interest.
Many South American pension plans have a hard time seeing
real value in offshore hedge funds, preferring long term
inflation-linked bonds, with a smaller percentage (<10%)
dedicated to hedge funds and private equity.
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41. Regional Investor Overview
Americas Nuvest Capital
These plans are conservative by nature and many simply
cannot manage the risk. Several plans we work with have had
or have some existing hedge fund exposure locally. Others plan
on introducing hedge funds as an asset class for the state
pension products only and not for their private pension
reserves due to the perceived risk profile of these investments.
While most plans do not see a major need for additional hedge
fund exposure currently, they believe it can be a way to
diversify risk in the future and mitigate currency risk.
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42. Regional Investor Overview
Americas Nuvest Capital
The investors in this region traditionally lean towards Global
Macro products or Equity L/S. They are not big buyers of
credit, Fl or commodities (they get this locally). They do not
have an interest in more emerging market exposure —- other
than some select Asia names and we find that these investors
are looking to diversify away from more EM exposure.
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43. Regional Investor Overview
Americas Nuvest Capital
Many investors in the region tell us that the hurdle to
"m0nitol" these investments becomes too cumbersome —
therefore, the US is an easy place to invest since many of
the investors in the region travel to the US several times a
year.
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44. Thank You
Thanks for viewing our Regional Investor
Overview . We hope it will be of help to you!
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