Capital Strategies Partners is using particular databases to find managers of niche active management strategies, and bring their capabilities and products to market.
Capital Strategies Partners is using particular databases to find managers of niche active management strategies, and bring their capabilities and products to market.
For boutique fund managers, distribution is a big hurdle. But accessing potentially lucrative markets abroad is more difficult still. Some resort to the use of a part-time salesforce, but this has often proved less than satisfactory. This is where a specialist broker offering a complete funds intermediation service stands to make good business.
Capital Strategies Partners (CSP) is one such broker that has targeted the distribution market in Italy. It is a fund intermediation specialist registered as a broker in Spain, with local presence in Italy, Portugal, Germany, Switzerland and Peru.
It takes over client relationship management, together with the functions of a representative office for the asset manager in the selected market. The model works both ways, as CSP also works to find fund managers for asset allocators in need of talented managers that otherwise might be difficult to find.
It employs several different methods for sourcing investment ideas and talents. But the most fruitful sources have typically been existing relationships with current or former managers.
Riccardo Milan (pictured), CSP’s Italy country head, says: “For more than 12 years, we have worked with some of the most talented managers all over the world and we maintain solid relationships with most of them. They often refer groups to us, or give our referral to new groups, to establish new business relationships.”
Value of networking
Third-party database information is also key. Milan says: “Absolutely vital to our method is the use of third-party databases. They enable us not only to find managers, but are a basic tool for tracking and analysing prospects.”
Each manager undergoes a due diligence process that usually takes about six months. CSP maintains an active prospective manager list that includes 15 to 25 possible management companies in a wide range of asset classes, with another 50 investment strategies under close observation. CSP interviews about 50 managers every year.
Milan says: “Once a manager passes the due diligence, that manager will stay on the prospective manager list until an agreement is reached, or until the manager drops off the list for one reason or another. Our business agreements with clients are always based on variable fees; we don’t ask for any retainer fees.”
CSP’s fund selection process starts with a key question: does the fund manager in question have an identifiable and sustainable edge? It is looking for a clearly defined investment style, with an edge on the competition, combined with a capability to give regular, consistent results.
