News came this month that IMQ had seeded Romanesco Capital Management's Persistence Fund alongside an Australian seeding company, Scout Global Funds. Oliver Alliker, director at Scout Global, explains that the firm was founded in Sydney from a family office in 2006 with the remit of investing in global emerging systematic trading managers via managed accounts.
The size of the pot that Scout Global can put into funds is dependent on the performance of the sub-funds, and Alliker confirms that they are currently invested in managers numbering up to the mid-teens. "We try and look worldwide for trading managers that have a specific edge in the market and we need them to be able to describe that edge and how they derive returns in the market" Alliker says in an interview with Opalesque. "We look at managed futures, foreign exchange, equity managers, options managers - we are agnostic in asset classes but try to invest in systematic strategies only because we use a strict quantitative approach in assessing a manager."
What Scout Global is looking for is emerging managers with smaller assets under management who target a specific market characteristic such as exploiting short term trends, or a manager with an innovative trading methodology.
"There are obviously some brilliant mature managers but we believe the great opportunity lies with emerging managers and there are not a lot of people who are looking at emerging managers - if you have detailed due diligence processes for evaluating these managers there is a significant opportunity" Alliker says.
The firm has no geographical preference but there is a natural bias towards Asia, but also have holdings in the US, Europe and currently looking at opportunities in South America. Scout Global likes systematic managers and has no long bias managers.
Research is challenging: "We do find it difficult to find managers - we look at a lot and only invest in a few, however, there are opportunities" Alliker says.
The investment in Romanesco came because Scout Global were looking at them, liked them and their approach to trading and the individuals involved. "We understood that they were also being looked at by IMQ and we admire their due diligence process and attention to detail so having them co-seeding gave us even more confidence" Alliker explains.
Their business terms are simple: they take no stake in the fund management firm with which they invest, nor a portion of their fees, they ask for 'favourable investment terms' or lower fees and they don't ask for a fixed investment term. "We believe we want to invest in the manager on the basis of our careful due diligence so if things change we want the freedom to alter our investment" Alliker says.
Because of the family office structure, Scout Global gives no performance figures at the moment but they are in the process of forming an offshore fund replicating their current strategy. The new fund will be available to outside investors in the form of a master feeder Cayman Island registered offshore fund.
(This piece first appeared in Opalesque's AMB in April.)
This article was published in Opalesque's Asia Pacific Intelligence our monthly research update on alternative investments in the Asia-Pacific region.