TFS provides specific regulatory services to Australian managed investment schemes, acting as a 'responsible entity for hire' to registered schemes and similar investment vehicles and the new business will be integrated into Select Fund Services (Select FS) headed by Alex Wise, who is also chief operating officer of Select Asset Management.
Select was established some 10 years ago by investment specialist Dominic McCormick, ex-AHL finance director Brendan Foley and head of technology, David Yale. In an interview with Asia Pacific Intelligence, Wise explains that the initial premise was to represent some interesting alternative managers in Australia through third party distribution. Given their past association with AHL, under the aegis of Select, the firm originally represented Aspect Capital, spun out of the founding AHL team.
In its original business form, Select managed multi manager portfolios with an emphasis on using alternatives as part of that multi-asset class approach, so on the investment side the firm built up expertise in investing in alternative managers, as well as representing some including a number of local hedge fund managers.
Post the global financial crisis, the focus has changed slightly, largely moving away from third party representation, keeping just London and Sydney based natural resources specialists Baker Steel Capital Managers, and concentrating on re-building the multi manager business up to pre-2008 levels of assets under management. These now stand at $856m (A$815m) with some $52m (A$50m) in a stand-alone fund of funds, the Select Alternatives Portfolio, which is largely made up of retail investment capital.
Wise joined the firm as chief operating officer for the Group in November 2012, and is also charged with growing the fund services business. "What we are doing is opening up our expertise and going back to partnering with good quality overseas managers to represent them in Australia, distributing their funds in Australia and providing good quality fiduciary and oversight services to Australian managers" Wise says.
Most funds in Australia are structured within the unit trust vehicle and in order to provide wholesale unit trusts, firms need a trustee. "There is a move to independent governance for retail funds which are a large source of capital in Australia" Wise says. "And for that you need a 'responsible entity' - a trustee with a statutory base and we offer that service and the acquisition of Total Fund Services has enhanced our offering in that regards."
Mom and Pop investors in Australia have often amassed a good sized pension pool of their own and are able to pick where they want to invest it. "What we are finding is that they are looking for a multi-asset portfolio" Wise says. "Select and other groups that offer portfolios to the high net worth community are finding them focussed on getting a diversified asset base which will include some alternatives and that is increasingly popular among the more sophisticated end of the retail spectrum."
Locally, Wise says there have been some interesting launches over recent years. "From my work in the Asian Pacific hedge fund industry over the past five years, we are confident that we can generate some interest from the wider Pacific Rim in terms of bringing quality managers to Australia and locally we find lots of talent where they have struggled to raise assets."
Wise's background as a consultant working with Australian superfunds and helping them to get used to alternatives from an operational perspective feeds his optimism that the firm can act as a bridge between alternatives and institutions in the region.
This article was published in Opalesque's Asia Pacific Intelligence our monthly research update on alternative investments in the Asia-Pacific region.