Industry Presence

Kazuaki Kojima, Head of Albourne Partners Japan, was recently interviewed by J-MONEY Magazine for their Summer Issue. The following extract has been translated from Japanese.

Albourne’s Senior Analyst and Partner Ronan Cosgrave was recently interviewed by Bloomberg’s Odd Lots Podcast.

The creation of an Employee Ownership Trust enables the efficient transfer of ownership, providing continuity and stability, and reaffirms Albourne’s commitment to remain strictly non-discretionary and independent. We continue to believe that our business model promotes our clients’ best interests by avoiding conflicts of interests created when Advisers also manage discretionary products.

Asset owners and managers may not always agree on fees, but one thing both parties are thinking a lot more about these days is creating innovative structures which – if done right – could provide rewards for the former and value for the latter.

As AI deployment grows, investors will increasingly need to monitor their portfolios' overall exposure to the transformative potential of this technology, particularly in relation to talent strategy integration.

The Standards Board for Alternative Investments (SBAI), an active alliance of institutional investors and alternative asset managers, announced today the launch of its Oceania Advisory Committee.

Albourne is delighted to announce that @Andrew McCulloch, has been named on the CIO Knowledge Brokers List. Andrew is a Partner in our Portfolio Group, Region Head of North America and is based in Connecticut. This year’s list compiles the names that CIOs and other asset allocators would recommend to their peers. CHIEF INVESTMENT OFFICER’s goal is to present a list of top consultants and advisers to the institutional investing market. In May, they asked CIOs and other allocators which consultants and advisers have “done right by them” in the current economic environment. Each nominee was asked to choose three questions from a list of seven to get a glimpse of their thoughts on investments and strategies. For the full article please click here.

In June Albourne signed an Open Letter supporting the adoption of cash hurdles. Due to further interest, this letter has been updated to reflect additional supporters, reaching a total of 60 signatories. Open Letter as of 6 August 2024. Albourne remains committed to supporting our clients and empowering them to maximize alignment of interests with the managers they invest with. Over the years, we have undertaken significant efforts to effect change in the industry to improve the level, transparency, and shape of fees. Further, we will be featuring our efforts to improve the alignment of fees and many other priority initiatives as part of our “Investor Manifesto III” launch on the Monday of our client event later this year. For more information, please get in touch with your Albourne contact.

The Standards Board for Alternative Investments (SBAI) and Albourne, co-chairs of the Open Protocol Working Group, have published updates to the Insurance Open Protocol (“IOP”). The IOP forms part of the Open Protocol (“OP”) risk aggregation template which was first launched in 2011 to standardise the collection and representation of risk information of investment funds for investors. Open Protocol is currently used by funds representing over US$2tn in assets under management. IOP provides a risk reporting template for funds that have significant exposure to property catastrophe insurance risk. It has been developed to cater for the unique characteristics of property catastrophe exposure – including risk types, sources of leverage, stress test results, and side pocketing. Michael Hamer, Partner and Senior Investment Analyst at Albourne Partners said: “IOP’s risk reporting has been revised to capture more aspects of the risk of property catastrophe insurance funds. It will improve the ability of investors to compare information between funds and to create a portfolio view of multiple funds. It is worth noting that IOP has materially benefitted from the input of managers and others in the SBAI ILS Working Group.”

Albourne Partners is recommending LPs partner with managers that are adept at capitalizing on emerging technologies within areas like energy efficiency storage, carbon capture and hydrogen fuel. The consultant says many energy transition investments are in new or nascent technologies – consequently, GPs may have limited expertise with these types of strategies. “Investors may have to get comfortable with the expertise they have in ancillary technologies or in the way that the GP is able to structure a deal to mitigate the risk around a novel investment.” Ashli Aslin, partner and senior analyst of real assets at Albourne told With Intelligence.“ For those with With Intelligence access, the full article can be found here.

1fs Wealth has bolstered the capabilities of its AI-driven global wealth intelligence platform by partnering with Albourne Partners Limited, an independently owned, non-discretionary global investment consultant which has been providing advice on alternatives for over 30 years.

Albourne has signed an Open Letter supporting the adoption of cash hurdles. This Open Letter on Cash Hurdles to the Hedge Fund Industry has thus far been signed by over 30 Hedge Fund investors and consultants. Albourne has been pushing for better alignment of interests on fees for many years; for more on this please see The Shape of Fees | Albourne. Albourne has been actively reaching out to investors and consultants and continues to encourage others to sign this letter; for those interested please reach out to your Albourne contact. Albourne remains committed to empowering our clients to maximize alignment of interests with the managers they invest with. Over the years, we have undertaken significant efforts to effect change in the industry to improve the level, transparency, and shape of fees. Significant progress has been made, as much of the industry has adopted concepts such as the “1-or-30” fee structure* and some have implemented beta hurdles. However, most funds continue to charge performance fees on the fund’s absolute return – regardless of the fund’s beta. As discussed in Albourne’s Preferred Fee Terms- Hedge Funds paper* to clients in 2017, we believe that performance fees should be paid only on alpha, accomplished through implementing a beta (or beta proxy) hurdle. Where a fund has no significant beta, we suggest a hard cash hurdle, representing the risk-free rate. In our recent research on Hedge Funds and Rising Rates*, in which we analyze the degree to which different hedge fund strategies consistently capture the increase in rates, we also state clearly our recommendation that all investors should seek to negotiate cash hurdles. We recognize that investors acting alone often struggle to engage GPs around this issue, often being told “no-one else is asking for this”. This ‘divide and conquer’ strategy is getting old, and we believe that presenting a unified voice will empower all investors when they raise this issue with their managers. *These three papers are available to clients and prospective clients only on Albourne’s Insights Pages. Clients can access these documents on the Castle or use their Castle log in details to access the Insights links. Prospective clients can REQUEST ACCESS to Albourne’s Insights page; the Insights Page provides a small sample of the latest research blogs, films, webinar recordings and invites, papers and capabilities.

As we turn 30, we are excited to announce this year’s new Partners!  This promotion recognizes these exceptional individuals who have contributed to our collective ‘road less traveled.’ After 30 years we are proud to continue to provide non-discretionary advice, transparent pricing, and independent ownership. Thank you, Ashli Aslin, Ash Gupta, Chantal Berendsen, Lucy Berrington, and Ronan Cosgrave for being part of our journey!

The SBAI today announced that Richard Johnston, Partner at Albourne Partners, has been appointed as the new Chair of the SBAI APAC Committee. Richard will lead the SBAI’s activities and initiatives in the APAC region. Richard Johnston said, “I have been involved as a member of the SBAI APAC Committee since its formation in 2016. Following our progress building our Hong Kong and Singapore-based stakeholder communities, I am excited to spearhead our efforts in Japan, South Korea and Oceania.” Richard Johnston succeeds Ted Lee as Chair of the APAC Committee. The SBAI APAC Committee is equally split across asset owners and managers, exemplifying their commitment to neutrality. Mario Therrien, Chair of the SBAI Board of Trustees, commented, “I am looking forward to working with Richard as we continue building on our progress in the region. I also would like to take this opportunity to thank Ted Lee for his leadership in galvanising our endeavours in the region in the last several years. His contribution was instrumental in putting the SBAI where it is today in the APAC region.“ The SBAI also has expanded its APAC team by adding Annie Yang as APAC Co-Head to work alongside Tina Hu who has been involved with the SBAI since 2021. The SBAI is an active alliance of over 150 alternative asset managers and over 100 institutional investors dedicated to advancing responsible practice, partnership and knowledge. It advocates for an effective alternative investment ecosystem through robust standards and the exchange of ideas. For more information on the SBAI or to join the SBAI community, please contact info@sbai.org or visit the website www.sbai.org.

As we enter our 30th year, we are excited to announce new Partners & equity options recipients.   While we are proud of and grateful to every member of the Albourne family, it is important to recognize those exceptional individuals who have been promoted to Partner, as well as those Partners who are either being awarded equity options for the first time or receiving additional awards, in acknowledgement of their impactful entrepreneurial contribution to our collective Albourne Journey.  This year, we are creating 7 new Partners from 7 different functions (Portfolio Group, Hedge Fund IDD, Private Markets IDD, ODD, Legal & Compliance, Communications and Client Group), 6 Partners are receiving equity options for the first time from 6 different functions (Portfolio Group, Hedge Fund IDD, ODD, Finance, Legal & Compliance and IT), and, finally, 15 existing equity option recipients are being awarded additional equity options: 

Writing for clients, Albourne's Partners Travis Williamson and Steven D’Mello comment

By Travis Williamson and Steven D’Mello Albourne Partners Following the collapse of FTX, counterparty due diligence has become even more crucial for all active trading strategies. Managers have been trying to find suitable counterparties, while accessing enough liquidity to reasonably execute their strategy. In the long run, we may see regulatory pressure that forces separation of execution, custody, and financing in digital asset markets to mitigate systemic counterparty risks. However, an early interim solution that is emerging to help manage counterparty risk is the increasing usage of off-exchange settlement which permits trading without pre-funding transactions on exchange by using leverage provided by the custodian, with settlement occurring on a daily basis. Mitigating Risks Going Forward: Avoiding usage of centralized counterparties through trading over the counter (OTC): While there is settlement risk, OTC is wallet to wallet with no ongoing counterparty risk. Triparty OTC is likely to be sought by certain managers to reduce settlement risk. DeFi is also peer-to-peer and wallet to wallet, but regulatory solutions are needed to enable institutions to confidently access it. Decentralized protocols are still subject to substantial security risks (i.e., hacks). Therefore, more maturation of the smart contract security process is required before we see institutions substantially use decentralized exchanges. Potentially, there could be a shift towards centralized exchanges that offer more transparency. Proof of reserves involve having the exchange identify its wallets to verify that the exchange has sufficient assets to meet its liabilities. However, proof of reserves may lack granularity on the liabilities side of the balance sheet. Therefore, currently, there is no better alternative than audited financial statements. A combination of proof of reserves and audited financial statements would provide more transparency into counterparty health than currently present. Increasing usage of off-exchange settlement, trading on a T+0 or T+1 basis helps mitigate some of the risk. Reducing counterparty risk by sweeping assets off exchange into segregated trust accounts and by diversifying exposure across multiple counterparties may also be prudent. Please click on this link for the full article.

Sizable swathes of the hedge fund industry have been left battered and bruised by 2022’s market turmoil. Managers across a range of strategies are nursing losses and capital outflows as the year draws to a close, while headlines suggest the appetite for less liquid alternatives – such as private equity and debt – continues to outweigh that of hedge funds among many allocator groups. And yet investors continue to show faith in hedge funds, as the findings of this latest Hedgeweek Insights report illustrate. Travis Williamson, Partner and Head of Hedge Fund Investment Due Diligence, at Albourne Partners, says investors are looking for assets that are correlated with inflation, have return streams unrelated to economic activity, and that provide a hedge to the higher market volatility that inflation creates. “Hedge funds are a particularly helpful asset class when thinking about the latter, as they are relatively liquid. Elsewhere we see continued focus on real assets, due to its inflation linked return profile.” Q&A: What are some of the major trends among private wealth investors when it comes to hedge fund allocation in 2023, particularly when compared to interest in other alts? Travis Williamson: “The appetite for alternative investments among the HNW group continues to grow. Many sophisticated investors are looking for ways to diversify, particularly following a period where some historically sound allocation frameworks have been challenged.” What are some of the issues keeping hedge fund allocators up at night? Travis Williamson: “Many issues and trends are strategy specific, but the overall trend of hedge funds becoming less liquid, from an LP perspective, is a significant trend. Hedge fund managers have become more dynamic in the pricing and liquidity profile of their offerings, and given the capacity constraints faced in many strategies, hedge fund managers are introducing more pass-through fee structures with reduced investor liquidity. This trend began in the large players within multi-strategy space and has permutated the industry.” Please click on this link to access the full report.

The spectre of trapped capital has heightened the desire for efficiency, according to a panel discussion during ILS Bermuda’s Convergence conference. There are various ways to manage capital efficiently and thus calm the nerves of an investor in insurance-linked securities (ILS). According to Michael Hamer, partner and senior analyst at Albourne, this topic has become a focus for investors because, over the last four or five years, substantial amounts of invested capital has become ‘trapped.’ As moderator of the panel “Reduce, reuse, recycle” at ILS Bermuda’s Convergence conference, Hamer began with a positive message. “A number of managers and service providers have been very active in trying to develop ways of making the investments more efficient. One of the areas that in particular has really grown quite rapidly is providing investors with a significant amount of non-recourse leverage through the use of rate and balance sheets, and tail hedges,” Hamer said. For the full article please click here.

Following an extraordinary couple of years for global markets, financial regulators have kick-started a range of initiatives after large swathes of proposals and reviews were put on hold during the Covid-19 pandemic. This latest Hedgeweek Insight Report examines in detail the gathering momentum of regulatory change post-pandemic and its potential impact on the hedge fund industry on both sides of the Atlantic - from the Securities and Exchange Commission’s far-reaching private fund adviser proposals to the EU’s wide-ranging reviews of AIFMD and MiFID/R. The report also reflects on the ways in which broader economic and political developments - spanning ESG and sustainable investing, cryptocurrencies, and Brexit – are potentially reshaping the future investment and compliance landscape for hedge fund managers. The volatility and high inflation rates experienced so far in 2022 have made it difficult for investors to specify certain regulation demands. “Historically, public and private pension plans have been most attentive to regulatory oversight; however today there is no overwhelming consensus to increase the current level of regulation,” notes Adrian Sales, head of operational due diligence and partner at Albourne. Read the full article here.

As the hedge fund industry continues to grow and evolve, and some established firms take a step back or convert into family offices, the fortunes of the next generation of managers are coming into sharp focus. Many larger hedge funds may have weathered the storms of recent years, but start-ups face an ever-expanding array of hurdles. In this latest Hedgeweek Insight Report, we explore how early-stage managers have fared. The insights within are drawn from a Hedgeweek survey of 55 emerging and established hedge fund managers, a series of in-depth interviews with industry participants, and further background research. Travis Williamson, head of hedge fund investment due diligence and partner at Albourne, argues that emerging managers can also offer investors alternative benefits. “Emerging managers are often sought for diversification, not just within the overall portfolio, but within the alternative sleeve of a portfolio. The immediate question is: what does this emerging manager bring to my portfolio to warrant taking the start-up risk? Often, start-up managers have brought novel approaches to ESG and implementation to the investment process,” he explains. He adds that Albourne’s clients are increasingly demanding diversity and inclusion, ESG and protocol questionnaires, all pointing to a desire for mission-based investing as well as increased transparency. For the full report, please click here. For a summary of the report, see this Hedgeweek article.

Albourne Announcements, New Partners, and Equity Recipients Albourne’s aspirations have always been multi-generational, and this has driven our approach to both equity participation and succession. It is with regard to the latter that we announce that: Albourne’s co-founder, Guy Ingram, will be stepping down from his Executive Committee (EC) role, but will remain in his capacity as Chief Economist. When the company started, Guy’s work product was “the promise” and we hope that the work product of today’s Albourne is a reflection of his work ethic. Beyond even his conscientiousness, however, is his conscience: this implied promise, much like the admiration of his colleagues for him, is entirely and utterly timeless. Filling the seat in Guy Ingram’s stead, is Anita Kouzapa. Anita joined Albourne in 2000 and has been Head of the Cyprus office since 2018. In the 4 years that Anita headed the Cyprus office almost doubled in size, further consolidating its mission critical role within the company. For more on Anita’s journey at Albourne over the last 21 years, please see the following short clip! In 2016, we introduced Alternates (deputies) to several key decision makers within the firm. This time last year, Anita assumed the Alternate role for Guy on the EC and as noted above is now taking her position on the EC. Anita will also serve as acting COO, transitioning her Head of Cyprus position to her Alternate, Sofia Vishnumolakala. Sofia (Head of IDD in Cyprus) has been at Albourne for over 18 years, starting her career at Albourne as a Research Analyst. Jane Hughes, Head of Europe, is retiring this year. We will miss her dearly and wish her the very best in her next chapter of life. Jane’s contribution to Albourne over the last 14 years has been remarkable. Kellie Hata (Head of European Private Credit) who joined in 2010, has been the Regions’ Alternate Head since 2017 is Jane’s successor. In Asia, Richard Johnston, current regional head, is transitioning to Chairman for the region, having founded our Asian business 17 years ago and grown the world class team in Hong Kong, Singapore, Tokyo, and Seoul to 40. Richard’s Alternate Debra Ng, who opened our Singapore office and leads the Portfolio group in the region, will formally assume Richard’s day-to-day business operational responsibilities, as the new Head of Albourne Asia. Meet the New Partners We are also delighted to announce 5 new Partners, 7 existing Partners who have become Equity Option partners, plus 12 additional Equity Option Recipients.

More than a quarter of the largest US hedge fund managers have the capacity to trade digital assets, With Intelligence can reveal. Research on regulatory filings show that 28 out of the top 100 US-based Billion Dollar Club Managers are mandated to trade digital assets. So far trading in the space has been exploratory in nature though market participants tell With Intelligence that interest from the traditional hedge fund segment is growing. Albourne’s D’Mello expects traditional hedge fund firms will continue to embrace cryptocurrency trading. “Our belief is that digital assets will continue to proliferate, not only amongst crypto HF managers but also across traditional hedge fund mandates that will increasingly express investment themes through usage of digital assets.” --- The full article can be accessed from With Intelligence here.

Albourne1 submitted to the US Securities and Exchange Commission (“SEC”) its views on the SEC’s Private Fund Proposed Reforms announced in February 2022.2 Please see the following link for the full response. We believe Albourne is uniquely placed within the industry to comment on potential unintended consequences and the broader impact of the proposals given our team’s coverage of many critical areas impacted including investment strategy, operations, portfolio management, reporting and private funds’ terms review. The SEC’s proposed reforms include sweeping changes that could materially impact the private funds industry.3 Albourne understands the concerns faced by investors as well as the challenges fund advisers will face to implement the proposals. The spirit of the proposals is to address many activities that have negatively impacted investors in the past. This could be due to inherent conflicts of the GP, a lack of transparency to investors or other factors. Albourne is generally supportive of many of the proposals but also notes certain proposals and options outlined by the SEC could have unintended consequences. Given the length of the proposal and the number of questions asked by the SEC, Albourne did not attempt to cover all of them; instead Albourne has looked to highlight five key proposals and provide insight on some of the questions posed by the regulator. The five key proposals covered are: 1. Quarterly statements 2. Mandatory private fund adviser audits 3. Adviser-led Secondaries 4. Prohibited activities 5. Preferential treatment With the SEC’s public comment period closed, Albourne expects changes to be made to the final proposed rules. The final proposal will likely push managers into a more institutional framework. While further progress is needed in the private markets space despite noticeable improvements since Dodd Frank, the downside with such proposals tend to be additional administrative burdens for smaller managers that will need to comply with the SEC’s new reporting requirements. This can increase costs, which in turn could be passed onto investors or reduce competitiveness by increasing the barriers to entry. Albourne will continue to monitor changes to the proposal and assess how they impact the industry once they become finalized. __________________ 1 “Albourne” and “we” refer to the group of companies comprising Albourne Partners Limited and its subsidiaries. 2 SEC announcement and proposal documentation is available for download at: https://www.sec.gov/news/press-release/2022-19 3 The SEC defines Private Funds as both Public and Private Market funds

Albourne is delighted to have won Hedge Fund Consultant of the Year at Institutional Investor's 19th annual Hedge Fund Industry Awards! Thank you for your votes! For details of all of the winners, please click here. __ The winners of the 2022 Institutional Investor's Hedge Fund Industry Awards were selected by majority vote through an online survey of the readership of Institutional Investor (“II”), which consist of participants in the hedge fund industry globally. There was an open (public) nomination process. The editorial team verified nominations. The nominations were made public and a voting process for the awards, including “Hedge Fund Consultant of the Year” (the “Award”) was opened. Voting for this award was open to investment fund managers. All investment consultants located in North America, Europe and Asia that advise institutional investors on hedge fund investments were eligible to receive the Award under the same survey criteria. The survey was not structured, administered or designed to produce a pre-determined result of Albourne winning the Award. In conferring the Award to Albourne, II attributed survey nominations for any one of Albourne’s affiliates as a nomination for Albourne. Albourne is not affiliated with II and did not pay a fee to be eligible to be nominated for the Award. The Award is not representative of an Albourne client’s experience. The Award reflects the subjective views of investment fund managers, and not those of Albourne’s own clients. The Award is not indicative of Albourne’s current or future performance.

The Alternative Investment Management Association ("AIMA"), together with leading digital asset custodians and industry experts (including Albourne), has published a new Industry Guide on Digital Asset Custody for institutional investors. The guide provides industry guidance on sound practices and key considerations around due diligence for institutional investors determining how to custody their digital assets. This jurisdiction-neutral guide has been primarily designed for institutional investors who are seeking the services of a digital asset custodian. It is the initiative of AIMA’s Digital Assets Working Group ("AIMA DAWG") – a cross section of around 300 senior industry experts including institutional investors, custodians, exchanges and other service providers. It is tasked with driving AIMA’s regulatory engagement, thought-leadership initiatives, and operational guidance in the area of digital assets. The concept of digital asset custody revolves around the safekeeping of a private key. However, as the private keys are used to store, manage, and transfer digital assets by the owner and help with the decryption of messages and authentication of transactions, they represent a single point of failure in the system. Therefore, private keys require sophisticated technologies to prevent theft, loss or destruction. It is the control and management of these private keys which have given rise to the frameworks supporting the custody of digital assets as a distinct and specialist service offering. While keeping a private key safe is fundamentally a technical need entailing specific hygiene protocols, when embedded within a commercial service offering, potential users of that service need to consider the terms upon which the service offering is provided, the regulatory framework sitting around the custody provider, any insurance provisions that are required or are in place and the legal basis upon which the assets are held. As a general resource, the guide should not be regarded as a substitute for professional advice, which should still be obtained where appropriate. Further, institutions engaging in digital asset custody should pay close attention to applicable regulatory requirements and guidelines issued by regulatory authorities in applicable jurisdictions. For the full paper please click here.

The Standards Board for Alternative Investments (SBAI), an active alliance of institutional investors and alternative asset managers, announced today the launch of its Global Regulatory Committee. The Committee brings together leading institutional investors, asset managers and investment consultants to enhance and support the SBAI’s dialogue with regulators around the world. Chris Bowlin, Sr. Compliance Counsel, Teacher Retirement System of Texas has been appointed Chair of the Committee, and Stephen Berger, Managing Director, Citadel, has been appointed Deputy Chair. Chris Bowlin said: “I am honored to chair the SBAI’s Global Regulatory Committee, which will help the SBAI further develop its balanced perspective on regulatory topics, taking account of manager and institutional investor considerations.” The SBAI Regulatory Committee will start work immediately and help formulate the SBAI’s responses to the US SEC's recent requests for public comments on its Proposals for Private Funds, Securities Lending, as well as Short Positions and Short Activity Reporting. Members of the Committee include: Gaurav Amin, Head of Fintech & Implementation, Albourne Partners Arthur Bengasino, Portfolio Manager, TelstraSuper Stephen Berger, Managing Director, Global Head of Government & Regulatory Policy, Citadel; Committee Deputy Chair Hans Bergström, Compliance Officer, AP7 Chris Bowlin, Sr. Compliance Counsel, Teacher Retirement System of Texas; Committee Chair Luana DiCandia, Director & Senior Legal Counsel, Ontario Teachers’ Pension Plan Jason Eng, General Counsel and Chief Compliance Officer, Dymon Asia Capital Kimberly Hamm, Director, Global Public Policy Group, BlackRock David Lau, Chief Compliance Officer, Springs Capital Brigid Rentoul, General Counsel, Winton Group Merel Uittenbogaard, Senior Legal Counsel, Regulatory Team, APG Asset Management Karl Wachter, General Counsel, Magnetar Capital Glen Zwicker, Managing Director, Head of Investment Operations, Howard Hughes Medical Institute Mario Therrien, Head of Investment Funds and External Management, CDPQ, and Chair of the SBAI said: “We see regulators increasingly turn to the Standards and the SBAI’s work more broadly, as they continue to take notice of the practical solutions the SBAI provides to some of the complex issues the industry faces. We are thrilled to have the members of this Committee support our efforts.” Since its inception, the SBAI, an Affiliate Member of the International Organization of Securities Commissions (IOSCO), has engaged proactively on a wide range of regulatory topics, including regulation for alternative investment managers, financial stability, short selling and ESG. Thomas Deinet, Executive Director, SBAI, said: “We look forward to working with the Committee to provide constructive input into the global regulatory process, supporting efforts to facilitate fair and efficient markets, reduce systemic risk, and help investors make well-informed investment decisions.”

Today, the SBAI, a global alliance of alternative investment managers and allocators and custodian of the Alternative Investments Standards, released a new Toolbox memo providing guidance on completing operational due diligence on crypto assets. The memo can be found in the SBAI Toolbox for Crypto Assets. More recently the asset class has gained attention from institutional allocators and alternative asset managers and some more traditional hedge fund managers are now allocating to this asset class. Institutional allocators conduct operational due diligence (ODD) on the underlying managers and funds that they invest in, and since crypto assets operate using different infrastructure than more traditional asset classes, any ODD must take account of certain more prominent risks. Steven D’Mello, Partner, Operational Due Diligence, Albourne Partners said: “ODD of crypto assets requires a more in-depth look into certain operational risks. The infrastructure is still in its infancy, and whilst it is becoming more institutionalised, careful attention needs to be paid. This memo from the SBAI continues its work on improving industry outcomes by providing a valuable toolkit for allocators to understand where the risks might be different from more traditional asset classes and provide guidance on the types of questions that should be asked in due diligence processes.” For the full press release, click here.

Chief Investment Officer magazine is pleased to present its 10th annual list of the world’s most influential investment consultants and advisers. Each year, the publication asks a varied group of chief investment officers and allocators which consultants and advisers have “done right by them” for the current markets. This year’s list compiles the names that CIOs would recommend to their peers. Andrew McCulloch What new qualities do you look for in a manager/service provider given the pandemic’s financial and economic impacts? The volatility catalyzed by the onset of the pandemic served as a stark reminder for allocators and managers alike that they must embed a high degree of intellectual rigor, humility, transparency, and forethought within their investment processes. Governance structures, risk management constructs, liquidity budgets, and regional diversification were all briefly tested in March 2020 before the rebound that followed. Managers with expertise and exposure in Asia fared substantially better as their markets decoupled from the rest of the globe, and we saw stronger governance structures empower investors to play offense in strategies which drew down more severely, anticipating a recovery. Still, others found themselves “fixing their roof during a rainstorm,” triaging potential liquidity concerns and stakeholder inquiries. Despite financial conditions not deteriorating further in this crisis, reactions to pandemic-driven volatility reiterated the value of these critical qualities in portfolio success when a future storm evolves into something more severe and unforgiving. Read the full article here. *** David Tatkow What do you think will be the biggest innovation in your industry in the next 10 years? The pandemic-era brought to the forefront issues of wealth disparity and racial inequality in a way that I believe will significantly influence our industry over the next 10 years. I believe that managers who acknowledge these issues, both in how they build their portfolios, and run their businesses, demonstrate great character, which is an essential factor in building fiduciary trust. Whereas even five years ago, many investors and managers regarded ESG as a niche consideration, the events of the pandemic I believe have compelled many investors to elevate social concerns, and evaluate prospective managers in part through those same concerns. Investors are looking at managers more closely both in terms of what companies they invest in, but also in how they manage their organization: What is the manager’s commitment to building a diverse organization, and how is this demonstrated through practices in hiring, terms of employment, and career development? I believe that the invigorated focus on ESG that the pandemic brought on will be a win-win in terms of creating a more equitable society, but also in strengthening organizations that embrace best practices. Read the full article here. _____________________________________________________________________________________________

Southeast Asian GPs jockey for global attention with mixed results as the largest LPs continue to hesitate to commit to the region. A trickle of investment fuels theories about how to get more. Most recently these concerns have been compounded by a generally ineffective response to COVID-19 across the region. There remains a sense, however, that Southeast Asian gambits in specialization and pivots to more hands-on models are merely meeting the baseline of expectations, rather than setting any of the region’s investors above the pack. These are areas of focus – tech and ESG in particular – that are not only essential to getting a commitment from global LPs; they’re essential to just getting a meeting. “Having a technology and operational value creation focus is no longer a differentiating factor but a critical component of any PE strategy,” says David Low, Partner and Head of Asia Private Markets at Albourne. David cites that, “in Southeast Asia, entrepreneurs may lack the experience, expertise and resources to expand regionally or globally or take their business to the next level. This is where PE managers can add the most value beyond bringing capital to the table. GPs that are able to execute this consistently and generate outsized returns will have an edge in attracting investors.” For the full article can be found here or expand below.

The Standards Board for Alternative Investments (“SBAI”) recently published a new memo on indemnification wording, as part of its Governance Toolbox. This memo provides an informational overview of indemnification wording, which is used by most funds in their governing documents. Indemnification clauses are crucial to investors, as they highlight circumstances that may require a fund to reimburse the asset manager for losses related to the investment management of the fund. Craig Dewberry, Partner and Operational Due Diligence Analyst at Albourne Partners said, “A robust and clearly written indemnification clause can provide comfort to an investor that this indemnity will only be relied on in appropriate circumstances. As such, investors should review this language as part of their initial due diligence processes to understand the implications of the specific way that it has been worded. This Toolbox memo is an important tool to help investors understand potential implications and due diligence questions they should be asking.” Please click here to read SBAI’s full press release.

Albourne Partners Limited (“Albourne”) is pleased to announce it was named “Best Investment Consultant” at the inaugural 2021 Institutional Asset Manager (“IAM”) Awards on 27 May 2021. The awards were based on a survey of Institutional Asset Manager’s readership of investment industry participants, encompassing fund managers, asset owners, allocators, intermediaries, advisers, service providers and counterparties. Voting for the awards was conducted via an online poll of Institutional Asset Manager readership, with participants nominating their top three candidates in each category. In total there were over 7,500 votes cast, with 42% coming from Fund Managers, 30% from Investors/Allocators, and 28% from Service Providers. John Claisse, Albourne’s CEO, commented, “While remaining committed to non-discretionary advice, fixed fee pricing and independence, our mission over the years has been to empower our clients to be the best investors that they can be. We are happy to see that this continues to resonate with the industry’s stakeholders”. Please see the interview John Claisse gave to IAM on recent changes in the industry, the importance of ESG, and more. Clare Cuming, Head of Communications at Albourne, mentioned, “The Institutional Asset Manager Awards recognize excellence among service providers; for Albourne to be named Best Investment Consultant is recognition that our hard work and contribution to the alternative investment sphere over the past 27 years – ever since the company’s inception – has had an important impact across the industry.” Please see the attached report issued by IAM on Albourne and other winners, as well as the link to the press release. -ENDS-

The Last Year This past financial year, our 27th, has brought with it unprecedented challenges for everyone across the world, and our thoughts are with those who have been so badly impacted by the pandemic. We are immensely proud of the incredible effort of everyone at Albourne over the last year, but also how we have pulled together to support our colleagues, our clients, and our communities through these difficult times. It doesn’t take a global pandemic to make one understand the importance of Family, but our company has never felt more like a family as we continue to fear for the loved ones of colleagues and our clients from around the world. We hold our breath until they can all again breathe easy. Albourne New Partners, Equity Recipients and Other Announcements Against such a backdrop, it would feel somewhat hollow to report that we are proud to have notched up yet another year of growth, both in terms of revenue and client numbers, except for the fact that it is this growth that allows us to create new Partners and allocate equity options to both first time and existing equity participants in our firm. Knowing the emotional investment made by all those named below, as well of their tireless fine-spirited contribution to all aspects of the firm, we are both truly humbled and deeply proud to make the following announcements: New Partners New Equity Option Participants Additional Equity Option Participants Angela Borrett, Anita Kouzapa, Carmen Lam, Clare Cuming, Craig Toner, David Low, Gaurav Amin, Jane Hughes, Kellie Hata, Kristen Jones, Neil Mackie, and Ryan Teal.

The Standards Board for Alternative Investments (SBAI) announces its latest Toolbox publication on side-pocketing within Insurance Linked Strategies (ILS). The memo provides practical guidance on the side-pocketing methods that can be used, robust governance arrangements, the appropriate charging of fees, and provides detailed questions for investors to ask asset managers during their due diligence on ILS funds. Following insurance losses from worldwide catastrophic events in 2017 and 2018, as well as potential insurance losses from pandemic related claims, the use of side-pockets within ILS funds has come under increased allocator scrutiny alongside valuation and risk reporting. This memo is part of the SBAI’s ILS Toolbox which also contains guidance on valuation in ILS funds and The Insurance Open Protocol risk reporting template. Michael Hamer, Senior Analyst at Albourne Partners (Bermuda) Limited said, “While the use of side-pockets within ILS funds is typically an investor friendly practice, this SBAI Toolbox memo provides a very useful framework for considering the appropriate alignment of interests between the various groups of investors and asset managers as well as a toolkit for ensuring robust practices and governance of the side-pocketing process.” _

Albourne is excited to announce that the firm has become a signatory of ILPA’s initiative, Diversity in Action. The ILPA Diversity in Action initiative brings together limited partners and general partners who share a commitment to advancing diversity, equity and inclusion in the private equity industry. The goal of the initiative is to motivate market participants to engage in the journey towards becoming more diverse and inclusive and to build momentum around the adoption of specific actions that advance DEI over time. ILPA has issued the attached press release to mark the first report in its Diversity in Action - Sharing Our Progress series. The first report focuses on how signatories are approaching DEI metrics and data capture. ILPA found that there is a strong desire for standardization and an appetite to expand metrics to cover additional underrepresented groups. Among signatories, 2-in-3 use the ILPA D&I Team Metrics Template which provides a model for reporting diversity metrics across 11 role categories, including gender and suggested race and ethnicity designations. ILPA and Initiative signatories are now working to expand the template to include metrics not represented today including: a non-binary/not disclosed option on gender, LGBTQ, veteran status, disability and age. Please see attached the full ILPA press release and paper for more details.

The Standards Board for Alternative Investments (SBAI) has established a new regional committee focusing on the SBAI’s work in Europe, the Middle East and Africa (EMEA Region) with Elena Manola-Bonthond, CIO of CERN Pension Fund, appointed as Chairman. The 11-member committee, which is equally split across asset owners and investors, includes Angela Borrett, Partner, European ODD, Albourne Partners. Managers from Europe (including the UK) account for 35% of the SBAI’s Signatories and institutional investors account for 32% of the SBAI’s Investor Chapter Members. The SBAI’s EMEA Committee is the third regional committee following the creation of its Asia Pacific and North American Committees in 2016 and 2018, respectively. Mario Therrien, Chairman of the SBAI said: “We’re excited about the launch of the EMEA Committee and are grateful for the support of the industry leaders who agreed to serve as its members. While the SBAI’s Alternative Investment Standards are universal in nature, it is important that we have industry leaders to address unique topics and facilitate the dialogue between regional asset owners, managers and regulators.” For the full press release, please click here.

The Standards Board for Alternative Investments (SBAI) has published three memos on alternative credit fund management focusing on fund structuring considerations, valuation and conflicts of interest. The memos provide guidance to managers and investors on these topics and a framework of questions investors may wish to ask managers when conducting operational due diligence. The memos were developed by the Standards Board’s Alternative Credit Working Group which consists of 45 leading institutional investors and managers - among which is Albourne Partners. The Fund Structuring Memo focusses on the key considerations for the two most common fund models employed by alternative credit managers: the closed-ended private equity model and the open-ended hedge fund model. The Valuation Memo highlights the key features of a robust valuation framework and illustrates the fair value process for direct loans. Ryan Teal, Partner and Head of Operational Due Diligence Americas at Albourne Partners and member of the working group said: “Fair Value matters to institutional investors, to inform their risk management and investment decision making, satisfy their accounting requirements, and ensure fair treatment of ultimate beneficiaries.” The Conflicts of Interest Memo identifies the specific conflicts of interest that can arise in funds investing in alternative credit, including in situations where different funds invest in different parts of a company’s capital structure and where one fund refinances a loan held by another fund. The SBAI Alternative Credit Working Group will continue to review other areas of relevance in alternative credit, including investor disclosure and applicability of Responsible Investment considerations. In addition to the SBAI’s work in Alternative Credit, the SBAI is currently running active working groups focussing on the following areas: Governance, Responsible Investments, Insurance Linked Funds, Factor Investing, Standard Investor Profile Template, as well as regional focus groups (China, Japan).

Albourne published the Investor Manifestor II (IMii) in October 2018, furthering its commitment to the pursuit of better practice within the Alternatives industry. This 50-point Manifesto is the second edition of the Investor Manifesto, and it covers ten themes that Albourne has been discussing with investors, industry bodies, managers and regulators. The booklet provides a short narrative of the objectives, key points, considerations, and ultimate value of the first 14 proposals of the Investor Manifesto II. Please click on the PDF icon to the left to read this.

Global investment consultant Albourne Partners announced its revamped News & Initiatives page on www.albourne.com. Albourne prides itself on its non-discretionary business model which sets it apart from competitors, and its role as an advisor and advocate for better practices within the alternatives industry over the last 25 years. The webpage features press coverage of Albourne in recent years and information on the firm’s key initiatives. “At launch, this page includes over 20 articles written on Albourne, including hot-off-the-press coverage from HFM on the importance of improving ESG data, as well as a recent piece from Pensions & Investments on the increasing rarity of pure-play non-discretionary consultants,” said Clare Cuming, Head of Communications at Albourne Partners. She added that, “The webpage hosts Albourne’s first public film, Women in Alternatives, which highlights several interviews with leading women in our industry and provides an update on Albourne’s Diversity & Inclusion initiatives.” Committed to improving the Alternatives Industry, some of Albourne’s key initiatives are: Investor Manifesto I & II: In October 2013, Albourne launched the Investor Manifesto, a 10-point plan, recommending areas for improvement in hedge fund reporting standards, disclosures to investors, documentation and governance. Subsequently, in October 2018, Albourne published Investor Manifesto II, which is a 50-point reference document of interesting ideas across all alternatives, spanning 10 general themes that Albourne plans to discuss with investors, industry bodies, investment managers and financial regulators. The Shape of Fees: Albourne has been leading efforts to promote fee transparency and encourage better-alignment of fee terms to achieve a more consistent and fair share of returns between investment managers and investors. Central to this initiative has been to encourage a dialogue between investors and investment managers on the “shape of fees”. One example is Albourne's development of the “1-or-30” fee structure, which we also refer to as “X-or-Y”. Albourne recognizes that one size does not fit all, and thus, advocates for a transparent range of economically-equivalent fee “shapes” to meet the wide and varied mandates of investors. Open Protocol: This is an industry-accepted, consistent reporting template for managers’ risk and exposure information, created to encourage transparency and to enable investors to aggregate exposure information at the portfolio level. Open Protocol is a template that standardizes how investment managers convey risk information. Albourne helped launch Open Protocol in August 2011 and is co-chair of its Working Group.

Texas Employees Retirement System, Austin, rehired Albourne as hedge fund consultant,a webcast of the pension fund's board meeting Wednesday showed. The $28.7 billion pension fund issued an RFP in March as part of the normal process of putting the services up for bid every few years. ERS' general investment consultant NEPC was the other finalist. Texas ERS originally hired Albourne as its first hedge fund consultant in 2011. Separately, the pension fund returned a net 5.3% for the year ended June 30, below its policy benchmark return of 6.1%. For the three, five and 10 years ended June 30, ERS returned an annualized net 9.2%, 6.2% and 8.9%, respectively, compared to their respective policy benchmark returns of 8.7%, 5.9% and 8.9%.

The ranks of pure-play alternative investment consulting firms are thinning as the consulting industry consolidates and firms add money management to their services, a trend that winnows investors' choices and opens up consultants to potential conflicts of interest. Faced with increasing competition from general investment consultants and pressure from asset owners to reduce fees, alternative investment consultants are adjusting by merging with other consulting firms or augmenting services with higher-profit money management and managing discretionary assets. A review of Preqin's top 20 list of nondiscretionary investment consultants and Pensions & Investments' database revealed only two pure-play alternative investment consultants that do not manage capital: Albourne Partners Ltd. and TorreyCove Capital Partners LLC. As part of the $56.5 billion Los Angeles County Employees Retirement Association’s search process earlier this year for a specialty investment consultant for hedge funds, illiquid credit and real assets, the Pasadena, Calif.-based pension fund scored bidders on potential conflicts of interest. LACERA in March hired Albourne Partners Ltd. as the best fit. Albourne had scored the highest of three finalists based on a number of factors that also included fees and services offered. Among its strengths, LACERA officials noted that Albourne was solely focused on alternative investments and that it had the least potential conflicts because it has a pure non-discretionary advisory model. The other two finalists derived a portion of their income from discretionary clients. Please refer to the full article for further details.

Following the insurance losses from catastrophic events worldwide in 2017 and 2018, the Standards Board for Alternative Investments (SBAI), whose members include both managers and institutional investors in alternative investments, has published “Valuation of Insurance-Linked Funds”, a document that provides guidance for investors conducting due diligence on funds that invest in (re)insurance-linked investments (“ILS Funds”). The document, developed by a working group of institutional investors, investment managers, and investment consultants – including Albourne Partners – is the first in a series of Toolbox Memos on ILS Funds to be published by the SBAI. Michael Hamer, Partner and Senior Analyst at Albourne Partners, said: “The process for valuing reinsurance investments is a very important aspect of due diligence, given the high levels of uncertainty that can arise after large loss events. Investors also need to understand the differing ways in which funds deal with this uncertainty, including the use of side pockets and other mechanisms that may reduce the risk of unintentional value transfers between investors. We look forward to contributing to the SBAI’s future work in this important area of investment.” Members of the SBAI ILS Working Group include representatives from Aberdeen Standard Investments, Albourne Partners, CPPIB, Elementum Advisors, Future Fund, Hiscox Re-insurance Linked Strategies, Nephila Capital, PGGM, PIMCO and Varma. The Toolbox Memo can be accessed here.

Sean Crawford joins in Connecticut, as the alts consultant boosts San Fran office with Spencer Edge. Albourne Partners has hired the former CIO of the New York Metropolitan Transportation Authority, HFM InvestHedge has learnt. Sean Crawford joined the Connecticut office last month. Albourne, which advises on $500bn in alternatives assets, has also boosted its ranks in San Francisco, bringing on board Spencer Edge.

For Mark White, real assets are starting to come into their own. “It’s the most interesting asset class to be in as far as I’m concerned,” he says. Formed in 1994, Albourne is a specialist alternative consultancy focusing on complex activity, including hedge funds, private equity, real estate, and real assets. White joined the firm in 2008 to build out its real assets practice. Now he oversees a team of nine dedicated analysts, conducting due diligence on investment managers, doing portfolio construction, and running day-to-day operations. He helps build portfolios from scratch and revamps existing ones, as well as advising on direct and co-investments, and managed accounts. According to White, he’s helped clients build and oversee (since Albourne is non-discretionary) roughly $21 billion in real asset portfolios.

Albourne has published its second Investor Manifesto setting out “game-changing” proposals to reform the alternative asset management industry for the benefit of fund managers and investors. The document, which contains 50 recommendations, was unveiled on the first day of the advisory firm’s annual meeting today. Points from the manifesto that are likely to prove particularly popular with hedge funds include a change to the US tax code that would make multi-year crystallization fee structures more tax efficient and the formulation of templates for permanent capital structures. Other key proposals include the development of an identifier database covering all industry participants and the creation of a standardised means of corporate-level ESG reporting.

The Standards Board for Alternative Investments (SBAI) has established a North American Committee of leading alternative investment managers and institutional investors to direct the SBAI’s efforts in the region. The SBAI is the global standard setting body for the alternative investment industry, supported by approximately 200 managers and investors overseeing $3 trillion. The North American Committee (NAC) was set up in March 2018 to help the SBAI direct its efforts in North America, including identifying local issues for inclusion in the SBAI’s studies and working groups, supporting the SBAI’s North American roundtables, communicating with SBAI members, and driving increased participation in the SBAI process among North American alternative investment managers and institutional investors.

Albourne commends SBAI for its guidance on Standardised Total Expense Ratio (STER). The SBAI STER calculates a single, standardised expense ratio to facilitate better understanding, comparison and monitoring of fees and expenses across alternative investment funds. A unique and important feature of the new STER methodology is that it includes the costs of research bundled with dealing commissions (often referred to as “soft dollared research costs”). Thus, the STER allows the comparison of a fund’s structural costs on an “apples to apples” basis (i.e., providing additional transparency to which operating expenses are allocated to the fund or conversely borne by the manager). The STER was developed in response to needs amongst institutional investors for a standardised tool to compare and monitor structural costs between alternative investment funds and over time. To make it useful for comparison purposes, STER excludes incentive fees which will fluctuate as a function of performance and trading related costs that will vary significantly and depend on the specific investment strategy. Given the benefits of a simple, consistent and transparent comparison of costs among funds and peer groups, the SBAI encourages the industry to start to use the STER methodology.

At HFMWeek’s European Hedge Fund Services Awards 2017, Albourne Partners won in the category of ‘Best Overall Advisory Firm.’ _ Disclosure: The awards are an annual fixture and consequently, the results may no longer be current or applicable. For the HFM European Hedge Fund Services Awards 2017, a total of 135 companies were shortlisted across 50 categories. For the category Best Overall Advisory Firm, 11 companies were shortlisted, and Albourne Partners came on top based on the following criteria: *Summary of business model, including countries of operation, client numbers and turnover/profit; Summary of business growth in 2016/2017 *Development of chosen category's offering in 2016/2017 - examples of product innovation and how the company has dealt with challenges (e.g. regulation) over the last year *Detailed information on how the company has dealt with customer retention and new client wins Albourne is not affiliated with HFMWeek, and did not pay a fee to be eligible to be nominated for the Award. The Award is not representative of an Albourne client’s experience. The Award does not reflect the subjective views of Albourne’s own clients. The Award is not indicative of Albourne’s current or future performance.

As a consultant focusing on alternative assets, John Claisse wants to address the elephant in the room: hedge funds. Performance for the investment vehicle—don’t let Claisse catch you calling hedge funds an asset class—may have disappointed recently in the broadest sense of things. But Albourne's CEO believes good investment decisions require a more narrow focus. “There are parts of the hedge fund space that are performing and parts that have been underperforming,” he argues. “There’s a very broad range of managers and quality out there. A well-constructed hedge fund portfolio with skilled managers can provide a real contribution.” That’s not to say the hedge fund model is perfect—far from it. One of Claisse’s goals at Albourne is to improve that model so that investors’ interests are more aligned with those of managers. So far, he says hedge funds have already made great strides on liquidity, transparency, and governance. Up next? Fees.