Bermuda-based Investor Select Advisors, a fund of hedge funds, has closed its operation in Singapore, leaving its managing director, Peter Douglas, to return full time to his own consultancy, GFIA.
Douglas joined ISA in June 2001 and was responsible for research and due diligence on the universe of alternative investment managers in Asia ex-Japan including Australasia. In addition, Douglas' role included marketing and sales to institutional investors and distributors in the region.
ISA has left because the Singapore office wasn't profitable, reflecting the difficulties of trying to market a complex investment product to conservative clients. Paul DeVierno, chief investment officer of hedge fund UOB Kay Hian, explains, "The investors here, when dealing with a complicated product, prefer to go to a name with a perceived expertise in these products, a name they know."
Douglas set up GFIA in 1998 as an advisor to mutual fund companies at a time when Singapore was aggressively marketing itself as a funds hub. When he joined ISA most of his client base had become established in the city-state, and GFIA faded into the background.
Now he is reviving GFIA as an asset management consulting firm providing support and advice on hedge fund investment to professional investors. Following ISA's departure from Singapore, Douglas says that the new GFIA has two streams of business. The first is manager monitoring, research and due diligence on Asian hedge funds for asset allocators outside the region. "We work with other professionals who appreciate the advantage of having someone on the ground. We are completely objective in that we are paid by the investor, not the manager, and we will remain that way," Douglas says.
"The second line of business is working with professional and fiduciary investors here in Asia who at an academic level realise the value hedge funds can provide and want to invest in them, but yet implemented," says Douglas. GFIA is approaching fiduciary investors who are looking at hedge funds and need objective help.
This is very much the role of a consultant and Douglas admits the likes of Mercers and Watson Wyatt will get a piece of this business, but he feels that being a specialist gives GFIA a decided advantage. "The large consultants business model works well with traditional investments, but alternative investments require a different approach from the ground up," states Douglas.
Having only been promoting the revamped GFIA's services for the past few weeks Douglas, who is the Singapore council member for the Alternative Investment Management Association, says it is too early to say which business stream will offer the most potential. "I was a bit apprehensive about building an advisory business in this economic climate, but I am very encouraged by the amount of interest expressed even at this early stage," he says.