Category Archives: AltsTech News

Urban Catalyst Funds Joins the Alternative Investment Exchange (AIX) Platform

Urban Catalyst Funds Joins the Alternative Investment Exchange (AIX) Platform

November 22, 2022 | Alternative Investment Exchange

Alternative Investment Exchange (AIX), the platform making it easy to buy, own, and sell alternative investments, welcomes Urban Catalyst Funds to the AIX platform. The team at Urban Catalyst Funds selected AIX to help make investing in its qualified opportunity zone (QOZ) funds easier than ever. The AIX technology platform will help Urban Catalyst Funds enhance their advisor experience, expand client relationships, attract new advisors to their offerings, and raise more capital.

After meeting with AIX, Urban Catalyst Funds was motivated to use the platform to automate its complex subscription process. Urban Catalyst Fund’s QOZ offerings provide investors with diversified real estate investments that enable them to defer capital gain taxes following the sale of an asset, such as stock, business, or property. Depending on when an investor joins a fund, complex calculations related to share allocations are conducted manually which causes extended delays. With AIX, calculations are automated and seamlessly captured in advisor-client subscription documents.

Unlike platforms that simply push digital documents between transaction stakeholders, the AIX technology platform facilitates the entire alternative investment lifecycle by digitally connecting all parties involved and seamlessly transmitting data through respective stakeholder systems. As such, AIX is uniquely able to help Urban Catalyst Funds reduce time spent managing documentation, minimize “Not In Good Order Trade” or NIGOs, and ultimately lower costs.

“At Urban Catalyst Funds, we’re committed to delivering an elevated experience for our advisors,” explained Pisoot Senethavilay, Director of Strategic Partnerships at Urban Catalyst Funds. “Our focus is to provide exceptional service to our partners and AIX supports these objectives by making the investment process straightforward and fluid.”

Another reason AIX was selected was for its commitment to data security encryption. AIX’s data security controls work to protect personal identifiable information transmitted between advisors and investors during the transaction lifecycle.

Urban Catalyst Funds is a leading real estate equity fund manager and development company. The company was founded in response to the 2017 Tax Cuts and Jobs Act legislation creating opportunity zones and opportunity funds. Urban Catalyst Funds ranks among the top 5% of all tracked opportunity zone (OZ) fund sponsors as measured by capital raised according to the research firm Novogradac, and has been named a top 10 OZ fund by Forbes.

“This technology integration is particularly exciting due to Urban Catalyst Fund’s commitment to the advisor experience and the team’s desire to elevate the way alternative investments are delivered and managed over time,” added Brad West, AIX COO. “We look forward to supporting Urban Catalyst Fund’s goals and helping the group bring the advantages of opportunity zone funds to more advisors and investors.”

About AIX: 

Alternative Investment Exchange (AIX) is an end-to-end digital platform purpose-built to improve the processes related to buying, owning, and selling alternative investments. AIX’s technology reduces friction, mitigates risk, and creates value across all alternative investing stakeholder groups – wealth managers, asset managers, custodians, transfer agents, and fund administrators. By evolving beyond documents to make data the connective tissue between alternative investment players, AIX makes it easier to conduct business and accelerate industry growth. For more information, please visit aixplatform.com or LinkedIn: linkedin.com/company/aix-alternative-investment-exchange.

Media Contact: 

Mark Tordik
Broadpath for Alternative Investment Exchange (AIX)
215-644-6503
mtordik@broadpathpr.com

Altigo Adds 46 New Sponsors to the Platform in 2022

Altigo Adds 46 New Sponsors to the Platform in 2022

November 9, 2022 | Altigo

Altigo continues to add well-known asset managers to its industry-leading electronic subscription platform for alternative investments. In fact, 2022 has seen the most sponsors sign with Altigo in a single year—46 to date—with more waiting in the wings in the remainder of Q4. In total, there are 113 sponsors active on Altigo representing nearly 300 offerings currently available on the platform.

This year’s bumper crop of sponsor signings has also further diversified the pool of offering options available on Altigo, pushing beyond real estate and expanding into energy, private equity, ’40 Act funds, debt funds, and limited partnerships.

Real estate investments are still in demand, however. In Q3 alone, several prominent DST sponsors on the platform each had more than 25% of their transaction volume come through Altigo. But that‘s just scratching the surface of Altigo’s best quarter of 2022, thanks to the platform’s growing roster of users.

Notable asset managers signed up with Altigo this year include Ashford Securities, Empire, ExchangeRight, MDS Energy Development, Megatel Capital Investment, Net Lease Capital Advisors, Peachtree, PREP Securities, Shopoff Realty Investments, StratCap, and Time Equities.

The 200+ transactional broker-dealer and RIA firms using the platform benefit from engaging with an ever-expanding pool of sponsors and are quickly discovering how Altigo makes investing in alts easy for all parties involved. And after hearing about Altigo from their distribution partners, sponsors are realizing the benefits of investments being completed quickly and correctly the first time, allowing them to close out offerings faster.

Altigo makes the entire investment process seamless, including ease of integration with transfer agents and custodians. And clients on the platform often recommend updates to Altigo’s product roadmap, resulting in new functionality that can benefit all participants involved in a transaction. With new features being rolled out every month, Altigo will continue to offer even more value to asset managers.

Visit the brand new Altigo website at www.altigo.com to learn more.

Phoenix American Onboards New Client – Real Estate Fund Sponsor Leitbox Storage Partners for Fund Administration

Phoenix American Onboards New Client – Real Estate Fund Sponsor Leitbox Storage Partners for Fund Administration

November 3, 2022 | Phoenix American

 

Phoenix American Financial Services (Phoenix American) is pleased to announce the onboarding of real estate fund sponsor Leitbox Storage Partners (Leitbox) for fund administration. Phoenix American will support Leitbox Portfolio Partners with its industry-leading investor service platform featuring the innovative STAR-XMS shareholder management / transfer agent system. Leitbox will benefit from Phoenix American’s advanced technology, decades of experience in fund administration for alternative investments and the company’s focus on personalized customer service.

Doing Storage Differently

Leitbox is a vertically integrated, full-service self-storage development and acquisition firm specializing in fifth-generation self-storage. The company focuses on three primary factors in self-storage facilities: design, location and use. The design is a three-story building with architecture resembling an urban mixed-use project. With government regulations ever-changing, Leitbox capitalizes on a niche of mixed-use properties with a portion of each property, usually 4,000 square feet, devoted to retail space. This not only helps in acquiring key properties in better markets but  may decrease overall risk for investors. Leitbox seeks to revolutionize self-storage by modeling their business approach after retail. The company’s new fund offering seeks to provide investors access to superior risk-adjusted returns in the self-storage real estate sector.

“Leitbox is excited to partner with Phoenix American. Their expertise and reputation in the industry is unmatched.  We believe the culture that Phoenix American has put together closely mirrors our own and we look forward to this relationship” says Bill Leitner, founder and Managing Principal of Leitbox Storage Partners.

50 Years of Institutional-Quality Fund Administration with a Boutique Approach

Phoenix American has developed the most advanced systems and efficient fund administration processes in alternative investments since the company’s origins as a fund sponsor in 1972. The company’s industry-leading STAR-XMS investor management / transfer agent system, its integrated fund accounting capabilities and customized investor services are the result of long experience both as a fund sponsor and as a third-party administrator for alternative investment funds. Given today’s increased regulation and investor expectations, deep operational experience and advanced technology are critical to success for fund sponsors. Phoenix American offers a full range of back office services including fund accounting, transfer agent services, investor/advisor web portal, tax services, in-house printing and fulfillment as well as full back-office outsourcing.

“We look forward to working with Leitbox,” said Andrew Constantin, Chief Operating Officer for Phoenix American. “They offer creative entrepreneurial solutions for investors in a dynamic real estate sector. Our fund operations solutions will be a great fit in helping to drive their success.” 

About Phoenix American

Phoenix American Financial Services, Inc. provides back office outsourcing, fund administration services and sales and marketing reporting services to fund companies in the alternative investment industry. The Phoenix American aircraft group, including its Irish subsidiary, PAFS Ireland Ltd, provides managing agent services for asset backed securitizations (ABS) in the commercial aircraft and aircraft engine leasing industry. The company is an affiliate of Phoenix American Incorporated along with Phoenix American SalesFocus Solutions. Phoenix American has five offices worldwide, was founded in 1972 and is headquartered in San Rafael, CA.

Technology Gains and a Growing Market Bring New Importance to Alts

Technology Gains and a Growing Market Bring New Importance to Alts

October 24, 2022 | John Rickman | Altigo

The following interview with Altigo co-founder Mat Dellorso first appeared in the September 2022 issue of Real Assets Advisor. In this interview, Mat shares his belief that alternative investments could comprise a bigger part of every investor’s portfolio, and his thoughts on what more can be done to make that happen.

You say that alternative investments could comprise at least 10-20% of a high-net-worth investor’s portfolio. Why is that?

Alternatives are going more mainstream. They’re becoming better structured with investor alignment and outcomes in mind, and the best investors in America—your endowments, your pensions, your large institutional investors—have always used alternative investments to outperform retail investors because they’re able to invest long term, find unique opportunities, and not just be beholden to stocks and bonds.

For many investors and advisers, alternative investments were typically just categorized as any investments other than traditional stocks, bonds, or mutual funds. I think the word “alternative” is a misnomer because these are investments that are needed. Many investors in America know and understand real estate and own a home, so the trend is that more investors are realizing that alts can play a meaningful and important part of an investment portfolio. Alts, as we think of them at Altigo, provide the potential for diversification, non-correlation with public market returns, growth, and income.

I think the timing for alts is good now because of the recent volatility in the financial markets. For the first time since 2008/2009 you’re seeing a market where it’s hard to find a good place for your money—the value of equities is declining broadly, fixed-income prices are trending lower as yields rise, and the value of cash and equivalents is rapidly eroded by inflation, and the crypto bubble has begun to deflate.

Commodities, like oil and gas, are doing well. Real estate hasn’t declined as fast as your public equity markets and bond returns. So, having some alts in your portfolio right now could benefit retail investors. And these alternative investment products are becoming more available, which is another trend making alts timely and sensible.

Alternative investments deserve to be a more meaningful part of a high-net-worth investor’s portfolio than just the traditional 60/40 growth-and-income model. A goal of 10-20% is good for sophisticated investors who understand the risks and can weather longer-term investment horizons.

Continue Reading Interview…

 

The Credit Face-Off: Do Leveraged Loans, High Yield Bonds, or Private Debt Offer the Best Value?

The Credit Face-Off: Do Leveraged Loans, High Yield Bonds, or Private Debt Offer the Best Value?

October 25, 2022 | Anastasia Amoroso | iCapital

While leveraged loans have far outshined all other fixed income assets this year, we explore why now might be the right time for investors to re-allocate from publicly traded leveraged loans to a barbell of high yield and private credit.

Another week brings another reset higher in Fed fund rate (FFR) expectations. Fed policy has been the driver of markets this year and effectively set the hurdle rate investments need to overcome to prove attractive to investors. At present, the expected FFR by Q1 ’23 is now approaching 5% (4.96% to be exact), up from 4.5% two weeks ago.1 As long as recession uncertainty is swirling and dampening the outlook for stocks, for investors it’s all about income and getting paid while you wait. So where can investors still get cash-beating income returns? With high yield, leveraged loans, and private credit all yielding in the range of 9-11%,2 the question remains – which one is best? Leveraged loans have far outshined all other fixed income assets this year, but in this week’s commentary, we explore why now might be the right time to re-allocate from publicly traded leveraged loans to a barbell of high yield and private credit.

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farm

Is the Market Ripe for Investing in Farmland?

Is the Market Ripe for Investing in Farmland?

September 28, 2022 | John Rickman | Altigo

As market worries deepen and faith in the 60/40 rule recedes, wealth managers are looking for new ways to balance and bolster client portfolios, with many pivoting to alternative investments as an option. Recent federal data suggests that investing in U.S. farmland—an oft-overlooked alt—might fit the bill for some investors.

In its 2022 Farm Sector Income Forecast, the U.S. Department of Agriculture’s Economic Research Service (ERS) stated:

“Net farm income, a broad measure of profits, is forecast to increase by $7.3 billion (5.2%) from 2021 to $147.7 billion in calendar year 2022. This expected increase follows an increase of $45.9 billion (48.5%) in 2021 from 2020.”

If realized, net farm income in 2022 would remain above its 2002–21 average, in real terms, the September 1 report added. Additionally, farm sector equity is expected to rise by 10.4% in 2022 to $3.34 trillion in nominal terms, according to the ERS.

It’s worth noting that expected increases in production expenses such as fertilizer and feed, as well as expected cuts in direct government payments to farmers and ranchers as part of pandemic assistance, are factored into the ERS’ forecast.

From an investment perspective, what do the data tell us about the market value of farmland itself in the United States? The NCREIF Farmland Index has an answer for that. According to the not-for-profit industry trade association, the total market value of U.S. agricultural properties came in at just under $14.6 billion during the second quarter of 2022.*

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iCapital® and Tikehau Capital Announce Partnership to Broaden Wealth Managers’ Access to Private Markets across EMEA

iCapital® and Tikehau Capital Announce Partnership to Broaden Wealth Managers’ Access to Private Markets across EMEA

September 15, 2022 | iCapital

Tikehau Capital (Paris:TKO), the global alternative asset manager, and iCapital[1], the leading global fintech platform driving access and efficiency in alternative investing for the asset and wealth management industries, today announced a partnership to increase wealth managers’ access to Tikehau Capital’s private market investing opportunities.

Through the partnership, Tikehau Capital will launch a customized marketplace powered by iCapital’s technology to deliver Tikehau Capital’s suite of alternative offerings to wealth managers and their high-net-worth clients in the EMEA region.

Initially, the digital solution will provide wealth managers with access to alternative investments which are generally accessible to institutional investors only. It includes the second vintage of Tikehau Capital’s Impact-driven real estate value-add strategy, and the third vintage of Tikehau Capital’s special opportunities strategy, which allows investors to seize credit opportunities across market cycles and credit dislocation.

Tikehau Capital’s offerings will also be made available via Allfunds, the world’s largest fund distribution network. iCapital and Allfunds announced a strategic partnership in June 2021 through which iCapital makes private market investment opportunities available for Allfunds’ clients.

While institutional investors have long had access to alternative investing opportunities, high-net-worth investors and their advisors have historically faced significant barriers such as high investment minimums and difficulties in accessing top-tier asset managers.

iCapital’s technology automates the subscription process, provides transparency into each step of the investing process and seamlessly integrates performance and reporting for alternative investments in an end-to-end digital platform, meaningfully improving the efficiency and client experience of alternative investing.

“We are delighted to partner with iCapital, the leading platform in the alternative investment market for the asset management industry. This strategic partnership is a key step for Tikehau Capital, allowing us to expand our investor base and provide investors with solutions across multiple assets classes,” said Antoine Flamarion, co-founder of Tikehau Capital.

“We believe that the trend of retail investors seeking alternative sources of returns that can offer diversification from traditional markets will be a significant force for change, and it is important for Tikehau Capital to address this trend and increase wealth manager’s access to private market investment opportunities” added Mathieu Chabran, co-founder of Tikehau Capital.

“Wealth managers working with individual investors are increasingly looking at the private markets to potentially generate high risk-adjusted returns with portfolio diversification. We believe that both Tikehau Capital strategies that will be distributed on the platform are particularly adapted to the current economic context and will meet investors demand.” added Vincent Archimbaud, head of Wholesale Europe, Tikehau Capital.

“Today marks another important milestone in our global expansion, and we are extremely pleased to partner with Tikehau Capital, a highly respected alternative asset manager, to provide EMEA wealth managers and their clients with institutional-quality private market investment opportunities,” said Lawrence Calcano, Chairman and Chief Executive Officer of iCapital.”

“Wealth creation is increasingly taking place outside the public markets. We are delighted to support Tikehau Capital in their ambition to offer banks and wealth managers across EMEA with greater access to the growth and diversification opportunities the private markets can offer to client portfolios,” commented Marco Bizzozero, Head of International at iCapital.

About iCapital

Founded in 2013, iCapital is the leading global fintech company powering the world’s alternative investment marketplace. iCapital has transformed the way the wealth management, banking, and asset management industries facilitate access to private markets investments for their high-net-worth clients by providing intuitive, end-to-end technology and service solutions; education tools and resources; and robust diligence, compliance, and portfolio analytics capabilities. iCapital’s solutions enable organizations to streamline and scale their alternative investments operational infrastructure and to provide access to direct investments and feeder funds at lower minimums through simplified digital workflows. iCapital-managed platforms offer wealth advisors and their high-net-worth clients access to an extensive menu of private investments including equity, credit, real estate, infrastructure, structured investments, annuities and risk-managed solutions. iCapital has been recognized on the Forbes FinTech 50 list in each year 2018 through 2022, the Forbes America’s Best Startup Employers in 2021 and 2022, and MMI/Barron’s Industry Awards as Solutions Provider of the Year in 2020 and 2021. As of August 31, 2022, iCapital services more than US$138 billion in global client assets, of which more than US$31 billion are from international investors (non-US Domestic), across more than 1,100 funds. Employing more than 1,000 people globally, iCapital is headquartered in NYC and has offices worldwide including in Zurich, London, Lisbon, Hong Kong, Singapore, and Toronto.

For additional information, please visit the iCapital website at www.icapitalnetwork.com | LinkedIn: https://www.linkedin.com/company/icapital-network-inc | Twitter: @icapitalnetwork

See disclosures here.

About Tikehau Capital

Tikehau Capital is a global alternative asset management group with €36.8 billion of assets under management (at 30 June 2022).

Tikehau Capital has developed a wide range of expertise across four asset classes (private debt, real assets, private equity and capital markets strategies) as well as multi-asset and special opportunities strategies.

Tikehau Capital is a founder led team with a differentiated business model, a strong balance sheet, proprietary global deal flow and a track record of backing high quality companies and executives.

Deeply rooted in the real economy, Tikehau Capital provides bespoke and innovative alternative financing solutions to companies it invests in and seeks to create long-term value for its investors, while generating positive impacts on society. Leveraging its strong equity base (€3.1 billion of shareholders’ equity at 30 June 2022), the firm invests its own capital alongside its investor-clients within each of its strategies.

Controlled by its managers alongside leading institutional partners, Tikehau Capital is guided by a strong entrepreneurial spirit and DNA, shared by its 725 employees (at 30 June 2022) across its 13 offices in Europe, Asia and North America.

Tikehau Capital is listed in compartment A of the regulated Euronext Paris market (ISIN code: FR0013230612; Ticker: TKO.FP). For more information, please visit: www.tikehaucapital.com.

Disclaimer

The funds are managed by TIKEHAU INVESTMENT MANAGEMENT SAS (on behalf of the funds that it manages), a portfolio management company approved by the AMF since 19/01/2007 under number GP-0700000006.

This document does not constitute an offer of securities for sale or investment advisory services. It contains general information only and is not intended to provide general or specific investment advice. Past performance is not a reliable indicator of future earnings and profit, and targets are not guaranteed. Certain statements and forecasted data are based on current forecasts, prevailing market and economic conditions, estimates, projections and opinions of Tikehau Capital and/or its affiliates. Due to various risks and uncertainties. actual results may differ materially from those reflected or expected in such forward-looking statements or in any of the case studies or forecasts. All references to Tikehau Capital’s advisory activities in the US or with respect to US persons relate to Tikehau Capital North America.

[1] Institutional Capital Network, Inc. and its affiliates (together, “iCapital”)

Contacts

iCapital Media Contacts
USA – Morgan Miller – + 1 919-602-2806 / icapital@neibartgroup.com
UK – Viktor Tsvetanov – +44(0)78 8466 7775 / vtsvetanov@headlandconsultancy.com
Italy – Marina Riva – +39 02/72.02.35.35 / m.riva@barabino.it
Switzerland – +41 31 311 43 48 / tanja.kocher@holisticom.ch
Hong Kong – Marylène Guernier + 852 3758 2696 / icapital@secnewgate.hk

Tikehau Capital Media Contact
Valérie Sueur – +33 1 40 06 39 30
UK – Prosek Partners: Alexa Bethell – +44 (0) 7940 166 251
USA – Prosek Partners: Trevor Gibbons – +1 646 818 9238
press@tikehaucapital.com

Tikehau Shareholder and Investor Contacts
Louis Igonet – +33 1 40 06 11 11
Théodora Xu – +33 1 40 06 18 56
shareholders@tikehaucapital.com

Phoenix American Releases White Paper on Operational and Strategic Considerations for Investment Fund Managers in Uncertain Economic Times

Phoenix American Releases White Paper on Operational and Strategic Considerations for Investment Fund Managers in Uncertain Economic Times

September 2, 2022 | Phoenix American

Report Provides Insights and Data on Interest Rates, Consumer Sentiment and Investor Perspective

Phoenix American, a full-service fund administration provider for alternative investment funds, has published a new white paper examining the current state the economy and key considerations for alternative fund managers. Fund Operations and Strategy in Uncertain Economic Times analyses the current inflationary and rising interest rate environment in the US economy and the outlook for alternative investment fund managers in 2022 and beyond.

The paper draws on Phoenix American’s perspective as an administration provider for real estate funds and features contributions from FactRight, a leading provider of due diligence on sponsors and products in the alternative investment industry.

Ambiguous Consumer and Investor Sentiment

Top takeaways from the report include: 

• Conflicting outlook of consumers. Data shows that Americans have a stronger view of the state of the overall economy and outlook for business than for their personal economic prospects.

• Higher but not high interest rates. The Federal Reserve has taken alarmingly fast and aggressive action on interest rates but they remain well below their long-term average.

• Operational considerations for fund managers. Fund sponsors can guard against the effects of economic fluctuations with lean back-office efficiency and the elimination of key-person risk.

• Strategic review. Fund managers should take the opportunity to examine any assumptions of their fund strategy that may expose performance to volatility risk from key economic indicators.  

50 Years of Fund Administration for Alternative Investments

Phoenix American has supported the back office needs of alternative funds since 1972, through times of both economic expansion and upheaval. The company’s systems and services enable real estate and other alternative fund sponsors to respond operationally to major changes in strategy with innovative and flexible solutions. New approaches to fund raising, cash flow and deal acquisition employed by Phoenix American client funds are supported by a versatile and robust back-office infrastructure.

“Inflation and high interest rates are a challenge for investment funds, no doubt,” said Andrew Constantin, Chief Operating Officer for Phoenix American. “But some are definitely better prepared than others, strategically and operationally, for sudden changes in market conditions.”

About Phoenix American

Phoenix American Financial Services provides full-service fund administration, fund accounting, transfer agent and investor services as well as sales and marketing reporting to fund sponsors in the alternative investment industry. The Phoenix American Aviation ABS group provides managing agent and accounting services for securitizations specializing in the commercial aviation leasing industry. The company is a subsidiary of Phoenix American Incorporated along with Phoenix American SalesFocus Solutions. Phoenix American was founded in 1972 and is headquartered in San Rafael, CA.

Media Contact

David Fisher
Director
dfisher@phxa.com

iCapital® to Acquire US Alternative Investments Feeder Fund Platform from UBS

iCapital® to Acquire US Alternative Investments Feeder Fund Platform from UBS

August 23, 2022 | iCapital

iCapital1, the leading global fintech platform driving access and efficiency in alternative investing for the asset and wealth management industries, and UBS (NYSE: UBS) today announced they entered into a definitive agreement whereby iCapital will acquire UBS Fund Advisor LLC, UBS’s legacy proprietary US alternative investment manager and the feeder fund platform it manages. The platform, generally referred to as “AlphaKeys Funds,” represents more than US$7 billion in client assets.

With this transaction, iCapital will assume the management and operation of the platform, which includes private equity, hedge fund and real estate feeder funds. UBS Financial Advisors will continue to serve their high and ultra-high net worth clients that hold feeder funds as they always have, providing advice and solutions to help meet their unique needs and financial goals.

“iCapital has a long-standing global relationship with UBS through which we utilize our market-leading technology to facilitate the management of their direct and feeder funds on a single platform and offer their advisors the tools they need to be successful,” said Lawrence Calcano, Chairman and Chief Executive Officer of iCapital. “We are thrilled to expand that relationship to include management of UBS Fund Advisor and the feeder fund platform.”

“This agreement underscores the importance of having partners like iCapital, with aligned values and priorities to support clients’ financial goals,” said Jerry Pascucci, Global Co-Head of Alternative Investment Solutions at UBS Global Wealth Management. “iCapital is uniquely qualified to manage the on-going operations of this platform and service our clients’ existing investments, enabling us to help our financial advisors focus on what’s important – providing personalized advice and solutions to their clients.”

In 2017, UBS became an investor in iCapital and entered into a strategic relationship with the firm to structure new feeder funds for UBS to distribute going forward. At that time, UBS also integrated iCapital’s proprietary technology into its private fund operations to streamline and automate its alternative investment offerings. In 2021, the strategic partnership was enhanced to further digitize the UBS Advisor experience, improving the information and analytics of clients’ private market investments across its international locations, including Switzerland, Hong Kong, and Singapore.

The transaction is expected to close during the second half of 2022. Terms of the agreement were not disclosed.

About iCapital

Founded in 2013, iCapital is the leading global fintech company powering the world’s alternative investment marketplace. iCapital has transformed the way the wealth management, banking, and asset management industries facilitate access to private markets investments for their high-net-worth clients by providing intuitive, end-to-end technology and service solutions; education tools and resources; and robust diligence, compliance, and portfolio analytics capabilities. iCapital’s solutions enable organizations to streamline and scale their alternative investments operational infrastructure and to provide access to direct investments and feeder funds at lower minimums through simplified digital workflows. iCapital-managed platforms offer wealth advisors and their high-net-worth clients access to an extensive menu of private investments including equity, credit, real estate, infrastructure, structured investments, annuities and risk-managed solutions. iCapital has been recognized on the Forbes FinTech 50 list in each year 2018 through 2022, the Forbes America’s Best Startup Employers in 2021 and 2022, and MMI/Barron’s Industry Awards as Solutions Provider of the Year in 2020 and 2021. As of July 31, 2022, iCapital services more than US$136 billion in global client assets, of which more than US$32 billion are from international investors (non-US Domestic), across more than 1,080 funds. Employing more than 1,000 people globally, iCapital is headquartered in NYC and has offices worldwide including in Zurich, London, Lisbon, Hong Kong, Singapore, and Toronto.

For additional information, please visit the iCapital website at www.icapitalnetwork.com | LinkedIn: https://www.linkedin.com/company/icapital-network-inc | Twitter: @icapitalnetwork

See disclosures here.

About UBS

UBS convenes the global ecosystem for investing, where people and ideas are connected and opportunities brought to life, and provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as to private clients in Switzerland. UBS offers investment solutions, products and impactful thought leadership, is the leading global wealth manager, provides large-scale and diversified asset management, focused investment banking capabilities, and personal and corporate banking services in Switzerland. The firm focuses on businesses that have a strong competitive position in their target markets, are capital efficient and have an attractive long-term structural growth or profitability outlook.

UBS is present in all major financial centers worldwide. It has offices in more than 50 regions and locations, with about 30% of its employees working in the Americas, 30% in Switzerland, 19% in the rest of Europe, the Middle East and Africa and 21% in Asia Pacific. UBS Group AG employs more than 72,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).

1. Institutional Capital Network, Inc. and its affiliates (together, “iCapital”)

Contacts

iCapital Media Contact
Morgan Miller
919-602-2806
icapital@neibartgroup.com

UBS Media Contact
Erica Chase
212-713-1302
erica.chase@ubs.com

Recession

Recession and Resilience: Looking to Leading Indicators

Recession and Resilience: Looking to Leading Indicators

August 5, 2022 | Andrew Snyder, Linge Sun, & Nicholas Reade | CAIS

The Fed continues navigating what appears to be an ever-finer line between a hard and soft landing for the U.S. economy. We look past the most recent GDP estimate to leading economic indicators that have historically proven to have greater predictive power to signal turning points in the economy1 in an attempt to better understand the probability of an impending recession.

As recession risks appear to rise, investors may find opportunities in alternative investments to attempt to increase the protection of their portfolios and seek to take advantage of potentially worsening economic conditions.

Strategies designed to enable capital preservation, like protection-focused notes, and those that can provide portfolio diversification, like hedge funds, may be particularly impactful in recessionary periods. In addition, special situations and distressed debt strategies may enable investors to access opportunities that typically arise as companies navigate a challenging environment of higher interest rates and increasing economic uncertainty.

Leading Indicators with Predictive Power2

GDP has been estimated to have fallen for the second consecutive quarter into 2022. Meanwhile, the Fed3 and the White House4 have emphasized that they do not believe the U.S. is currently in a recession and rebuffed the view that a recession is officially inaugurated through two consecutive contractions of GDP.

While the topic of GDP’s contribution to the definition of recession has been a hotly debated topic, it is important to remember that GDP growth is a lagging indicator of the state of the economy.5 To analyze the risk and potential severity of a recession, we look beyond GDP and through the slew of economic data to focus on indicators which tend to change in advance of the rest of the economy—specifically those statistically compelling in signaling past U.S. recessions (Exhibit 1).6

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Clearing Up Misconceptions about Alts

Clearing Up Misconceptions about Alts

August 12, 2022 | John Rickman | WealthForge

Have you ever wondered why alternative investments are called “alternative” investments? Industry insiders know that “alts” are essentially anything other than stocks, bonds, or cash. They can include real estate, hedge funds, private equity, and even fine art and antiques.

Unfortunately, broadly referring to these types of investments as “alternative” creates a visceral reaction among some wealth managers and their clients that allocating to alternatives exposes them to the same risks associated with cryptocurrency, Richard Hillson of Hillson Consulting says. “That’s like saying I had a bad experience with a stock once, and I’ll never pick a stock again,” he adds.

The alternative investment space is vast and varied, but includes tried-and-true asset classes such as real estate that have predictable returns and less market volatility.

Do your clients have questions about alts? Check out the full video, presented by Alta Trust and Altigo.

Watch Video

BNY Mellon’s Pershing Delivers Next-Gen Technology and Integration Capabilities for Smarter, More Personalized, Highly Efficient Experiences

BNY Mellon’s Pershing Delivers Next-Gen Technology and Integration Capabilities for Smarter, More Personalized, Highly Efficient Experiences

June 15, 2022 | BNY Mellon Pershing

BNY Mellon’s Pershing (“Pershing”) today announced the next generation of technology solutions for advisors and wealth management professionals from its flagship conference INSITE 2022. Experience and efficiency are front-and-center in this latest round of updates with the introduction of the new NetX360®+ platform and enhancements to its NetXServices integration portal. Both have been optimized to deliver a more intuitive, seamless user experience, from the advisor experience to operations and business processing.

“We’re launching our next-generation professional platform, NetX360+,” said Tim Foley, Managing Director, Technology, BNY Mellon | Pershing. “It works with you as a personal digital partner — the more you engage with it, the more it will provide a curated experience, including insights tailored just for you. We have an incredible wealth of data that we’re using to make the experience smarter, more personalized, and more intuitive. It’s extremely powerful, spotlighting better ways to serve your clients and targeted opportunities to grow your business.”

NetX360+, Pershing’s redesigned, premier platform equips advisors with a more streamlined user interface and more intuitive experience, available today, including:

• Hyper-personalization based on individual user profile and usage patterns

• Machine learning-driven search results for faster access to relevant data

• New data insights based on client behavior and market activity that highlight recommended next best actions to proactively support client needs and business growth opportunities

• Integrated learning via a digital adoption platform to help users achieve swifter proficiency with new features and tools

NetXServices Integration Portal, Pershing’s next-generation integration source which launched last year, has been enhanced on several fronts. The portal now delivers an easy way to access all integration capabilities, including one of the fastest account openings in the market. Pershing’s Integration Hub delivers bi-directional, real-time data synchronization with a growing network of integrated third-party providers. A build-once, deploy-many framework significantly reduces the time required for clients to complete new integrations.

In addition, the portal has been updated with a complete API set, including two new options designed to deliver real-time data access and convenient self-service:

• Streaming APIs to enable firms to dynamically update their platforms

• Asset movement via digital authorizations for payments and asset transfers from Pershing to third-party brokerage accounts

“We are committed to delivering the innovation and efficiency that digital-first wealth management firms need in today’s consumer-driven environment,” said Ram Nagappan, CIO, BNY Mellon’s Pershing. “Our robust set of APIs offer firms direct access into our full clearing and custody platform, with a suite of integrated solutions for managing real-time orders, workflow, activity, rules, approvals and reporting.”
For more information about INSITE 2022—including a full agenda of speakers, sessions and events please visit bnymellonINSITE.com. Join the conversation on social media by following @Pershing on LinkedIn and Twitter and the #realinsite hashtag.

ABOUT BNY MELLON’S PERSHING

BNY Mellon’s Pershing is a leading provider of clearing and custody services. We are uniquely positioned to help complex financial services firms transform their businesses, drive growth, maximize efficiency, and manage risk and regulation.

Wealth management and institutional firms outsource to us for trading and settlement services, investment solutions, bank and brokerage custody, middle and back office support, data insights, and business consulting.

Pershing brings together high-touch service, an open digital platform and the BNY Mellon enterprise to deliver a differentiated experience for every client.

Pershing LLC (member FINRA, NYSE, SIPC) is a BNY Mellon company. With offices around the world, Pershing has over $2 trillion in assets and millions of investor accounts. Pershing affiliates include Albridge Solutions, Inc. and Lockwood Advisors, Inc., an investment adviser registered in the United States under the Investment Advisers Act of 1940. Additional information is available on pershing.com, or follow us on LinkedIn or Twitter @Pershing.

 

UMB: State of the Market: Non-Traded REITs and BDCs

UMB: State of the Market: Non-Traded REITs and BDCs

August 9, 2022 | UMB

In times of wild market volatility, alternative investments are alluring panaceas to vulnerable portfolios. Once reserved for institutional and high-net-worth investors, even some of the more exotic alternative investments are now mainstream. This report provides an overview of the current state of non-traded real estate investment trusts and non-traded business development companies, plus insights on upcoming trends in this product segment.

Uncorrelated asset vehicles such as non-traded real estate investment trusts (‘non-traded REITs’ or ‘NTRs’) and non-traded business development companies (‘non-traded BDCs’) have recently piqued the curiosity of asset managers, advisors and even retail investors.

These investment opportunities offer diversification, income, tax benefits and different risk return profiles. As the attraction of alternative investments such as NTRs and non-traded BDCs intensifies, asset managers are actively considering adding them to their product suites.

Access Full Report

Altigo Surpasses $2B in Transactions

Altigo Surpasses $2B in Transactions

July 26, 2022 | WealthForge

Only seven months after hitting the $1 billion mark, Altigo has crossed $2 billion in alternative investments completed on the platform, representing more than 8,600 alts subscriptions since its debut in mid-2019. Altigo’s growth and adoption continues with its adviser user base now topping 185 transactional broker-dealer and RIA firms, with over 200 alternative investment offerings currently “live” and accepting investments on Altigo.

Today, Altigo supports a range of alternative investment offerings from nearly 100 sponsors, including non-listed REITs, qualified opportunity zone funds, non-listed preferreds, interval funds, direct private placements, DSTs, private equity funds, and non-listed BDCs. Nine out of the top 10 DST sponsors, including Inland Private Capital, Capital Square 1031, Cantor Fitzgerald, ExchangeRight, and Passco have seen the speed and efficiency that Altigo provides and have contributed to its growth. 

“Cantor Fitzgerald was the very first sponsor to sign up with Altigo when it launched in 2019 as we shared a common vision for using technology to make it easier for advisors to do alts business and to improve the overall experience for the end investor,” said Jay Frank, President at Cantor Fitzgerald Asset Management. “We are thrilled with the progress that the entire industry has made by embracing Altigo as a solution that makes alts investments incredibly easy.”

Altigo’s success and high rate of both sponsor and advisor adoption is not only due to meaningful results such as reduced NIGO (not-in-good-order) paperwork error rates (to as low as 4%), but also to lightning-fast order entry. A key benefit that sets Altigo apart from other platforms is the team behind it and its commitment to client experience. IBN Financial Services, a broker-dealer recently partnered with the platform, spoke about the onboarding experience:

“These guys have been absolutely great,” said Rick Carlesco, CEO at IBN. “They went to our conference, they talked to our reps, they did individual training—they walked us through the entire process. Change from the old-fashioned way of submitting paperwork can be difficult but the continued training, communication and support from the team truly sets Altigo and the team apart.”

Wealth managers have seen Altigo streamline investment processing and compliance by providing access to all firm-approved alternative offerings in a single white-labeled portal. Altigo also includes custom firm forms and custodian partners’ letters of investment authorization within the workflow. The platform integrates with popular CRM and compliance and risk management tools as well.

“Before I started using Altigo, I had to painstakingly populate each subscription document and depending on the number of alternatives involved in the order, it could take hours to fill in all of the necessary forms,” said Chloe Guinan, Operations Associate at Claraphi. “With Altigo, I simply choose the asset that the client wishes to invest in, select the advisor, enter the client information one time, and the system pre-populates all of the necessary documents for me. Along with the subscription document, the required custodial documents are included in the bundle that can be sent to the client for electronic signature directly through Altigo’s system.”

Altigo will be rolling out even more features and functionality in the second half of the year, helping to expand its value to the market.

“We are pleased by the rate of adoption from wealth management firms and fund managers with our second billion dollars coming only seven months after our first,” said Mat Dellorso, Co-founder at Altigo. “It’s a testament to our team, the desire for portfolio diversifying investments in the market, and the need for transformative technology to make the process easier for all to do more business. This speed of adoption on Altigo enables us to expand across more and more firms in the alternative investment market, bringing greater efficiency to the industry.”

 

The Expanding Universe of Business Development Companies and their Real-World Investment Impacts

The Expanding Universe of Business Development Companies and their Real-World Investment Impacts

July 20, 2022 | John Rickman | WealthForge

A recent blog post from WealthForge:

Tax-advantaged, non-traded business development companies (BDCs) are alternative investment funds designed to boost the economy while generating a steady stream of income for both retail and accredited investors in the fund.
 
BACKGROUND AND OUTLOOK

BDCs are closed-end investment funds that help finance small, developing, and financially troubled U.S. firms. BDCs pool money from multiple investors and invest that money in business debt and equity. They are also required to provide subject matter expertise to the companies they invest in.

BDCs must invest at least 70% of their total assets in so-called “eligible portfolio companies,” which are valued at less than $250 million and typically lack conventional means of raising money or inviting analyst interest to boost their profiles.

Created by Congress in 1980 as part of amendments to the Investment Company Act of 1940, BDCs can be publicly or privately traded. Those that file publicly may elect to come under the auspices of the Act, meaning, among other things, that they agree to Securities and Exchange Commission (SEC) regulation. Election also means BDCs must develop compliance programs and file regular reports with the SEC.

In April 2020, the SEC adopted rule amendments aimed at making it easier for BDCs to respond to market opportunities by streamlining BDC registration processes. The reforms also included disclosure and structured data requirements designed to help investors better analyze fund data.

As of July 2022, there are currently 49 publicly traded BDCs with combined assets of more than $121 billion, according to CEFdata.com which monitors listed and non-listed BDCs. The universe of non-traded BDCs is smaller with $95.6 billion in assets across 58 funds. Assets or gross assets are total investments including leverage and doesn’t take any discount into account.

2021 was a big year for publicly registered, non-traded BDCs, which raised more than $15.7 billion that year, according to The Stanger Market Pulse. This year looks to be even bigger, with the same category of BDCs having already raised more than $13.8 billion through May, according to Stanger.

SIZING UP BDCS AND THEIR INVESTMENTS

The universe of BDCs may be swiftly expanding, but the funds themselves — and the businesses they invest in — are down to earth, and certainly not as lofty in investing in the Amazons of the world, CEFdata.com’s John Cole Scott tells Altigo:

“These aren’t large corporate deals, they’re small- to middle-market investments. The average BDC loan size is around $11 million, with the average BDC portfolio containing roughly 100 such investments,” says Scott. Interest rates for about a third of BDC loans come in under 6.5%, with the rest averaging around 7.31%, he notes.

“BDC companies are both geographically and industry sub-sector diverse and are often operating in your own back yard. They really are impacting communities everywhere, not just in New York or California,” Scott adds.

BDC RISKS AND BENEFITS

A continuous offering over time, BDCs have the potential to provide both retail and accredited investors with a steady stream of distributions stemming from interest income, dividends, and/or capital gains when the investments are sold.

Without factoring for inflation or commissions and fees, BDC yields can range anywhere from 5-10% depending on market conditions. However, BDC fee structures are often far more steep than other types of alternative investments.

As with real estate investment trusts (REITs), if 90% or more of a BDC’s taxable income is annually distributed to investors, BDCs may enjoy pass-through tax treatment. This is only allowed if BDCs are registered and regulated as a registered investment company, and most are. BDCs are only taxed once at the stakeholder level, thus, as with REITs, investors must pay ordinary taxes on their investment earnings.

BDC’s low liquidity profile and sometimes lengthy investment commitments make them unsuitable for some investors, and because BDC target businesses are generally small businesses, these types of alternative investments are typically considered high-risk. Therefore, it’s good to collect as much information as you can on any individual fund before making any commitments.

STREAMLINING THE INVESTMENT PROCESS

As with other offering types, the investment process for BDCs is time consuming and paper laden. Subscription processing technology like Altigo can reduce investment time from weeks to minutes and virtually eliminate errors associated with paper subscription documents.

With over 200 alternative investment offerings currently available on Altigo, our platform supports a range of alternative investment products such as non-listed BDCs, non-listed REITs, qualified opportunity zone funds, non-listed preferreds, interval funds, direct private placements, DSTs, and private equity funds.

For more information about how Altigo can streamline the investment process for BDCs and other alternative investments, contact us for a brief demo.

UMB: Seven questions to help build distribution strategies for interval and tender-offer funds

UMB: Seven questions to help build distribution strategies for interval and tender-offer funds

July 19, 2022 | James Curry | UMB

“We wish we’d talked to you six months ago” is a comment I hear often from private fund managers as they work out distribution strategies for their first registered product. Too often, managers have to backtrack when their sales, operations and investment teams aren’t on the same page. Here are seven questions drawn from practical experience to align your team—and avoid wasted time and effort.

The first six questions help define and refine a distribution strategy. The seventh is a critical one about product economics.

1. Who are your initial investors and target market?

There’s a big difference between retail investors (and their advisors) and large institutional RIAs and family offices.

Say you’ve been encouraged by retail-market RIAs to make your strategy available to their clients. It’s important to understand what they are expecting—because it may well mean your presence on mutual-fund platforms that present interval and tender-offer funds together with standard open-ended funds.

Institutional RIAs and family offices, by contrast, are unlikely to require that platform presence.

2. What platform does the RIA prefer?

There are two defined and separate distribution paths for interval and tender offer funds depending on your funds structure. Do the advisors interested in your product work primarily—or only—with funds available on a specific platform? Your fund’s valuation structure and other factors will determine which distribution path you choose and ultimately how your funds are approved and made available to the various RIAs, broker-dealers and wire houses.

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What does a custodian do for alternative investment managers?

What does a custodian do for alternative investment managers?

June 29, 2022 | Amy Small | UMB

Legacy mutual fund managers are likely accustomed to hearing about custody requirements driven by regulation. But what does a custodian do for alternative asset managers who are not experienced in hiring a qualified custodian?

The primary duty of a third-party custodian is loss prevention by safeguarding assets. All registered funds, even those with alternative strategies, are required by law to use a custodian, who “sit between” the investment manager and the assets themselves, for everyone’s protection.

Many unregistered alternative funds—such as hedge funds and limited partnerships—also use a custodian, often at the request of one or more large investors who want the strong controls provided by third-party oversight such as compliance with anti-money laundering (AML) requirements. Or, because the ancillary services provided by a custodian support efficiency in their cash management and investor onboarding efforts.

The word “custodian” can be a bit confusing, especially in the context of alternative asset classes. The role I’m addressing here is different from the services a manager’s prime broker may provide. Private fund custody, in this case, refers to third-party oversight and processing services sometimes known as “bank custody” or “institutional custody.”

That said, like prime brokers, private fund custodians can provide a suite of services that complement the primary function. For prime brokers, sales and trading is the primary function, complemented by ancillary services such as financing.

For institutional custodians, risk reduction is the primary function, complemented by services such as:

• Servicing and settling trades

• Managing overnight cash

• Providing real-time reporting on cash availability

• Enabling straight-through processing on cash movements

• Tax Reporting

• Managing proxy and corporate actions

• Handling foreign exchange (FX) needs

• Segregating collateral

• Registering and opening foreign accounts

Not surprisingly, these private fund custody services relate to either or both securities themselves or the cash transacted for them. That intersection of securities and cash is precisely a custodian’s domain—and where it applies rigorous controls to avoid mistakes and fraud.

Investor-related services 

But private fund custody services can extend even further to areas relating closely to the investor base of an alternative fund. These investor-related services can end up making a huge difference in managers’ operational efficiency. One such area is online reporting, via an investor portal that allows investors self-service access to account information.

Another investor-related area—one which we’ve seen significant interest—is help completing alternative investment subscription documents on a manager’s behalf. This can include completing the core offering documents as well as AML and know-your-customer (KYC) requirements for each investor.

Financing arrangements and more

Although prime brokers are more associated with financing than custodians, managers should know the role private fund custodians can play in supporting their financing strategy. At UMB, for example, we work strategically with both our customers and their existing lenders to create tri-party collateral agreements.

Bank custodians like UMB may also be able to support alternative managers even further throughout the investment lifecycle with traditional banking and escrow services, investor servicing and fund administration.

Ultimately, our work as custodian is to keep all parties secure and provide the client service that helps managers run their businesses as efficiently as possible.

UMB’s is among the nation’s leading institutional custodians. Our team offers a complete range of domestic and global custody services with a high-touch service model. Visit umb.com to learn how we  can support your firm’s institutional custody needs, or contact us to be connected with a custody team member.

 

UMB: Five key banking-as-a-service terms you should know

UMB: Five key banking-as-a-service terms you should know

July 11, 2022 | David Robinson | UMB

Although Banking-as-a-Service (BaaS) is new, banks have been making their services available behind the scenes for decades. What’s changed in recent years is the explosion of fintech firms seeking to partner with banks to access the payment rails historically limited to regulated financial institutions.

A greater number of participants has led to the need for more standardized language about BaaS.

In the past, it was easy enough for a bank to communicate with a brokerage firm about setting up deposit accounts for its customers so they could benefit from FDIC insurance coverage. Any questions about how that worked, and who was responsible for what, would naturally get worked out as a matter of course.

Now, by contrast, multiple fintechs may be talking with multiple banks about multiple services…and all using slightly different terminology. That can slow down the solution-building process, especially when the solution involves several entities.

Besides speed to market, there’s another reason for banks and their clients to establish and use clear terminology: risk management. Getting payments right within the guardrails of the regulatory environment is essential. Connected parties may jointly touch many thousands of transactions on a daily basis. To effectively communicate about varied roles and responsibilities particularly related to risk and regulation, it’s imperative to have communication clarity.

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More Banks are Moving Asset and Liability Management Systems to Cloud

More Banks are Moving Asset and Liability Management Systems to Cloud

July 6, 2022 | SS&C

A recent SS&C Algorithmics survey (conducted by Alchemer) shows 45% of respondents are looking to migrate, or have already migrated, their Asset Liability Management (ALM) systems to the cloud. This is a major global shift from ALM being almost always in-house and shows that both banks and regulators are increasingly accepting cloud for ALM risk technology.

When asked what their biggest challenges were in making the transition, most respondents cited infrastructure costs, knowledge transfer between IT and business, the siloed legacy risk modeling or data sources, and a one-size-fits-all approach. These challenges can be addressed by choosing a provider that uses a solution as a service model that incorporates the software, expertise and infrastructure required to support each client’s needs.

Key factors respondents gave for making the move to the cloud were the modernization of architecture, improving return of investment (ROI) and scalability. ALM can have significant calculation demands, with banks needing to project millions of products in the balance sheet over both time and risk scenarios. It is important to have a solution that leverages cloud technology—something a simple lift and shift approach cannot do.

To support the transition to the cloud, SS&C Algorithmics ALM and Liquidity Risk on the Cloud enable banks to use the entire range of functions of the award-winning solution as a service model. Banks benefit from all the advantages of the modern and flexible SS&C Algorithmics software as a solution (SaaS) without having to take care of the required infrastructure, operation and support, as these services are provided by SS&C.

Functional and technical support is provided by SS&C experts to ensure the smooth operation of the solution including a seamless migration between versions. Leveraging the expertise of Algorithmics’ team helps mitigate implementation challenges identified in the survey, including knowledge transfer (55% of respondents) and talent retention (42% of respondents).

The SS&C Algorithmics SaaS option provides all the necessary components for the secure, highly performant and scalable operation of the financial risk management system. This includes the provision of environments, 24/7 monitoring and disaster recovery.

Functionally, SS&C clients benefit from the full SS&C Algorithmics ALM and Liquidity Risk solution including browser-based interfaces for configuration of modeling, behavioral assumptions and planning, ad-hoc run orchestration and interactive reporting.

The SS&C Algorithmics ALM and Liquidity Risk solution is provided via the SS&C Private Cloud. Where banks have existing enterprise-wide cloud initiatives, the solution is also available on other major cloud platforms including Microsoft Azure, Amazon Web Services and Google Cloud Platform.

For more information, contact us.

CAIS and BNY Mellon’s Pershing Unveil New Features to Streamline Alternative Investing for Financial Advisors

CAIS and BNY Mellon’s Pershing Unveil New Features to Streamline Alternative Investing for Financial Advisors

June 30, 2022 | CAIS

New integrations including SSO, enhanced Document APIs, and automated Order Entry will help to tackle challenges and improve advisor experiences

CAIS, the leading alternative investment platform, and BNY Mellon’s Pershing (“Pershing”), a leading provider of clearing and custody services, today announced a series of updates to the CAIS platform that will seek to enhance alternative investment product access and order processes, as broker-dealers and financial advisors allocate to new asset classes on behalf of their clients.

“Outdated manual processes have been one of the major barriers to alternative investment fund allocation for the independent wealth management community,” said Matt Brown, Founder and CEO, CAIS. “As access to alternatives goes mainstream, our collaboration with Pershing highlights CAIS’s ongoing commitment to supporting advisors as they transact, and report on, the full spectrum of alternative investments.”

The expanded partnership between CAIS and Pershing offers a new level of integration that seeks to make investing in alternatives faster, more secure, and convenient for advisors. Among its new features is the automation of submitting order forms, enabled by API connectivity between CAIS and Pershing’s NetX360® investment platform. Eliminating the need for manual order entry is intended to lower the risk of transfer errors or lost forms, increase data security, and reduce the number of steps required by advisors, investors, and fund providers.

“We are pleased to expand on this partnership with CAIS that will enhance the alternative investing capabilities being offered to advisors,” said Justin Fay, Director, Global Strategy and Product Management, BNY Mellon’s Pershing. “As investor demand for alternatives continues to grow, our priority is to make all aspects of the process more efficient and less time consuming.”

The updates build on CAIS and Pershing’s existing partnership, which automated manual transaction and documentation processes to reduce human error potential and improve advisors’ ability to browse, research, and allocate to alternative investments. CAIS has also introduced Single Sign-On (SSO) for broker-dealers and RIAs working with Pershing. The authentication scheme should allow users to securely access independent software applications using a single set of credentials. CAIS anticipates that the result will be improved time management, lower IT costs inside advisory and brokerage firms, and mitigation of risks tied to enterprise fragmentation.

CAIS offers broker-dealers and financial advisors a choice between a complete end-to-end platform solution or a customized, modular service for specific advisor-sourced funds and strategies. Financial advisors and independent broker-dealers who use CAIS via Netx360® also have access to CAIS IQ, a proprietary learning system that helps users learn faster and retain information longer. Private funds available through CAIS undergo independent investment and operational due diligence performed by Mercer.

This announcement follows CAIS securing over $325 million in growth capital from Apollo, Motive Partners, Franklin Templeton, Reverence Capital Partners, Stone Point Ventures, and Hamilton Lane, which values the Company at more than $1.1 billion.

About CAIS

CAIS is the leading alternative investment platform for financial advisors who seek improved access to, and education about, alternative investment funds and products. CAIS provides financial advisors with a broad selection of alternative investment strategies, including hedge funds, private equity, private credit, real estate, digital assets, and structured notes, allowing them to capitalize on opportunities and/or withstand ever-changing markets. CAIS also offers custom solutions for advisors seeking to create custom fund vehicles around ideas they source.

CAIS also provides an industry-leading learning system, CAIS IQ, to help advisors learn faster, remember longer, and improve client outcomes.

All funds listed on CAIS undergo Mercer’s independent due diligence and ongoing monitoring. Mercer diligence reports and fund ratings are available to advisors on the CAIS password-protected platform. CAIS streamlines the end-to-end transaction process through digital subscriptions and integrated reporting with Fidelity, Schwab, and Pershing, which make investing in alternatives simple.

Founded in 2009, CAIS, a fintech leader, is empowering over 5,300+ unique advisor firms/teams who oversee more than $2.5+ trillion in network assets. Since its inception, CAIS has facilitated over $17+ billion in transaction volume as the first truly open marketplace where financial advisors and asset managers engage and transact directly on a massive scale. CAIS has offices in New York, Los Angeles, Austin, and San Francisco. For more information about CAIS, please visit www.caisgroup.com.

Securities offered through CAIS Capital LLC, member FINRA, SIPC.

About BNY Mellon’s Pershing

BNY Mellon’s Pershing is a leading provider of clearing and custody services. We are uniquely positioned to help complex financial services firms transform their businesses, drive growth, maximize efficiency, and manage risk and regulation.

Wealth management and institutional firms outsource to us for trading and settlement services, investment solutions, bank and brokerage custody, middle and back office support, data insights, and business consulting.

Pershing brings together high-touch service, an open digital platform and the BNY Mellon enterprise to deliver a differentiated experience for every client.

Pershing LLC (member FINRA, NYSE, SIPC) is a BNY Mellon company. With offices around the world, Pershing has over $2 trillion in assets and millions of investor accounts. Pershing affiliates include Albridge Solutions, Inc. and Lockwood Advisors, Inc., an investment adviser registered in the United States under the Investment Advisers Act of 1940. Additional information is available on pershing.com, or follow us on LinkedIn or Twitter @Pershing.

Media Contact

For CAIS
Nadia Damouni
pro-CAISPR@Prosek.com

UMB: What does a custodian do for alternative investment managers?

UMB: What does a custodian do for alternative investment managers?

June 29, 2022 | Amy Small | UMB

Legacy mutual fund managers are likely accustomed to hearing about custody requirements driven by regulation. But what does a custodian do for alternative asset managers who are not experienced in hiring a qualified custodian?

The primary duty of a third-party custodian is loss prevention by safeguarding assets. All registered funds, even those with alternative strategies, are required by law to use a custodian, who “sit between” the investment manager and the assets themselves, for everyone’s protection.

Many unregistered alternative funds—such as hedge funds and limited partnerships—also use a custodian, often at the request of one or more large investors who want the strong controls provided by third-party oversight such as compliance with anti-money laundering (AML) requirements. Or, because the ancillary services provided by a custodian support efficiency in their cash management and investor onboarding efforts.

The word “custodian” can be a bit confusing, especially in the context of alternative asset classes. The role I’m addressing here is different from the services a manager’s prime broker may provide. Private fund custody, in this case, refers to third-party oversight and processing services sometimes known as “bank custody” or “institutional custody.”

That said, like prime brokers, private fund custodians can provide a suite of services that complement the primary function. For prime brokers, sales and trading is the primary function, complemented by ancillary services such as financing.

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Opportunity Zone Funds: Could Changes Be on the Horizon?

Opportunity Zone Funds: Could Changes Be on the Horizon?

June 28, 2022 | John Rickman | WealthForge

A recent blog post from WealthForge:

A key incentive of the federal opportunity zone program may have expired, but qualified opportunity zone funds continue to offer considerable long-term tax advantages for investing in private capital. In addition, legislative changes to opportunity zones currently under consideration in Congress may end up restoring the program’s 10-15% basis point boosts that expired at the end of last year.

WHAT’S NEXT FOR OPPORTUNITY ZONE FUNDS?

Opportunity zone funds reinvest unrealized capital gains into long-term projects in low-income communities, typically real estate located in a qualified opportunity zone (QOZ). There are more than 8,700 census tracts in U.S. urban, suburban, and rural areas that America’s governors and mayors have designated as economically distressed QOZs.

Current law allows QOZ investors to defer paying taxes on their investments until 2026. If a QOZ investment is held for 10 years, any appreciation on the investment essentially becomes tax-free.

Certain expired provisions of the law allowed QOZ investors to enjoy a 10% reduction in initially deferred capital gains. However, proposed updates to opportunity zones would:

Extend the federal program and its related deferrals for another two years (2028 and 2023, respectively)
Allow qualified opportunity zone funds to invest in other qualified opportunity zone funds
Notably, the bicameral, bi-partisan proposal would also increase the program’s reporting requirements — to promote more equitable distribution of QOZ investments — and sunset tracts no longer determined to be in distress.

Even if proposed updates to the opportunity zone program fail to proceed, QOZ funds remain a beneficial tax-advantaged option for long-term investing in private capital, while creating jobs and improving economic outcomes for people living in economically distressed communities.

Want to learn more about opportunity zone funds and other alternative investments available on Altigo? Download our complimentary e-guide or contact us.

 

Financial Advisors Want Alts for Everyone, According to a New CAIS Survey

Financial Advisors Want Alts for Everyone, According to a New CAIS Survey

June 21, 2022 | Holly Deaton | RIAIntel

A new survey suggests that financial advisors want all retail investors to have the same access as accredited investors.

A majority of financial professionals, including RIAs, believe that all retail investors should have access to alternatives. Financial advisors already widely recommend that clients who meet the accredited investor requirements allocate to alternatives, according to a new CAIS survey shared with RIA Intel.

The survey of 303 respondents, 107 of whom identify as financial advisors, was conducted by Prosek Partners at the May 2022 Morningstar Investment Conference. The survey was conducted on behalf of CAIS, an alternative investment platform used by more than 5,300 advisory firms with more than $2.5 trillion in assets.

More than 83 percent of financial advisors surveyed say that all retail investors should have access to alternative investments — and 82 percent say that they’re recommending alts to accredited investors. One reason for this may be that 42 percent of those surveyed say the traditional 60/40 portfolio is not as effective as it once was, and 33.6 percent said that it’s not at all effective. 

“When you look at the 60/40 portfolio right now, it’s not doing well. The question is where to find income distribution,’” says Abby Salameh, CMO and managing director of CAIS IQ. “Alternatives are the front-runner as a solution to that challenge.”

Investment in alternative assets has boomed in the past year, even as 2022 saw increased market volatility in traditional asset classes. Global alternative assets under management are expected to increase by 60 percent and reach $17 trillion between the end of 2020 and the end of 2025, far outpacing global GDP and inflation rates, according to alternatives data and research firm Preqin. Dave Lowery, head of research insights at Preqin, told RIA Intel that the more recent volatile macro conditions could accelerate the move toward alternatives, with any drop in value a potential buying opportunity.

CAIS’s own data showed significant growth during the first half of 2022, with the majority of flows across alternative asset classes on the platform seeing double- to triple-digit percent increases; private equity allocation was up 500 percent year-over-year on CAIS, and registered funds were up 400 percent year-over-year. Hedge fund allocations and private credit were up 30 percent and 40 percent, respectively, and real estate was up 80 percent year-over-year.The CAIS platform did see a decrease in digital assets, by 72 percent year-over-year, but all other asset classes and total asset flows increased year-over-year. The number of companies using CAIS has also doubled during the past 12 months to more than 5,300 advisory firms, the company told RIA Intel in May. 

The first half of 2022 saw the launch of several alts-focused platforms such as Gridline, an alts platform targeting smaller funds, and AltExchange, a Plaid-like service that aggregates and organizes information from more than 50 alternative investment platforms for wealth managers.

However, high barriers to entry still exist for investors and advisors who want to diversify with alternatives. They’re expensive, complex, and illiquid, and many advisors don’t even consider them. 

According to the CAIS survey, about 70 percent of respondents cite a lack of education about alternatives as a hurdle to investing in them, while 37.6 percent say high levels of administration and paperwork are barriers to using alts. In addition, 34 percent of advisors cite concerns around due diligence and compliance processes as difficulties when making allocations.

Salameh said that education for both advisors and investors is the key to breaking down some of the barriers that advisors encounter along the alts road. To that end,  the Chartered Alternative Investment Analyst (CAIA) Association recently launched its own education platform to help educate financial advisors who want to learn more about alternatives, following a significant uptick of designation holders. CAIS itself launched a learning tool in 2019.

Bento Engine Scores $1.1 Million in Seed Funding

Bento Engine Scores $1.1 Million in Seed Funding

June 23, 2022 | Holly Deaton | RIAIntel

Bento Engine, a fintech company that mines CRM data and alerts advisors when it finds potential advice opportunities for their clients, announced Wednesday that it had raised $1.1 million in a seed round of funding from a group of nine high-profile wealth management executives.

The cohort of investors consists of Marty Bicknell, CEO and president of Mariner Wealth Advisors; Shannon Eusey, CEO and co-founder of Beacon Pointe Advisors; Greg Friedman, chief strategy officer of Wealthspire Advisors; Doug Fritz, president and founder of F2 Strategy; Jen Goldman, president of Jen Goldman Consulting; Anton Honikman, CEO of MyVest; Andy Putterman, founder and CEO of 1812 Park; Gavin Spitzner, president of Wealth Consulting Partners; and Kelly Waltrich, CEO and co-founder of Intention.ly. At least one other investor participated in the round but was not named by the company.  Honikman will join Bento’s board. 

The investment came in the form of a SAFE (simple agreement for future equity). All investors in the seed round have agreed to receive future equity priced at the next round of funding. Philipp Hecker, CEO and co-founder of Bento Engine, told RIA Intel that the company anticipates the next round to start in 12 to 18 months. 

Bento Engine was founded in the spring of 2021. The company spent six months developing and testing the product with six advisory firms that ranged from $100 million to $17 billion in AUM. The product was officially launched in 2021 and has grown to serve 31 firms and hundreds of financial advisors. The company’s product enhances the performance of CRMs and integrates with popular brands such as Salesforce, Dynamics, Practifi, XLR8, Redtail, and Wealthbox, representing about 80 percent of the CRM market. In general, wealth manager satisfaction with CRMs is plummeting, with many advisors complaining that CRMs do not deliver on expectations and that they don’t age well.

Bento Engine plans to use the capital to expand. Approximately half of the $1.1 million raised will go to product development and half to broaden its reach among wealth management firms. The company, which currently has five employees, also plans on hiring four more to support the expansion effort.

Bento’s technology includes an API script that mines CRM data on advisors’ clients to provide actionable insights. In addition, it delivers automated alerts around significant age-related milestones (such as contribution catch-ups that start at age 50) and produces related multi-format content (PowerPoint, pdfs, and e-mails) that is compliance pre-approved and that advisors can white-label and use immediately with clients. 

Hecker believes that the firm’s products offer value to CRM providers, too. “[CRM firms] view us as true partners because we increase the productive time spent in the CRM. We increase the ROI that firms get from a meaningful investment into the CRM. We put the CRM on steroids,” he says. 

Bento is based on a sliding-scale subscription model, with the price dependent on the size and number of advisors using the software. It starts at $99 per month for one lead advisor.

While the company is relatively young, Hecker says that advisor retention remains high. Since the product debuted, only one advisor out of hundreds has canceled their subscription.  

In the coming months, the Bento Engine plans to roll out a variation of its original product that has been adapted to serve retirement plan participants. It also plans to expand the script and alert system to include an additional 30 life events. 

iCapital Market Pulse: Portfolio do’s and don’ts as the Fed hits the brakes

iCapital Market Pulse: Portfolio do’s and don’ts as the Fed hits the brakes

June 17, 2022 | iCapital

After a hawkish Fed meeting, investors are rightly worried about what rate hikes may mean for growth, and what that might mean for portfolio positioning. We still see a sustained growth slowdown–but not outright recession–as the most likely outcome, and recommend staying with a defensive portfolio stance, potentially integrating alternatives, for now at least.

The U.S. Federal Reserve’s June meeting was hawkish, but not a hawkish surprise for the markets, as an aggressive path of interest rate increases was already priced in.
 
By moving aggressively the Fed is restoring some credibility—with inflation this high, rates are far too low and need to be raised quickly. Especially while the economy is still strong and there is a window in which it can act decisively.
 
Importantly, the Fed seems to have updated the markets on its reaction function—its focus is on fighting headline Consumer Price Index (CPI) inflation (rather than just focusing on the core, which is declining) because this measure seems to be driving consumer expectations. That is why it is important it acts firmly to slow inflation because higher expectations could become entrenched. If inflation (headline or not) comes in hotter than expected, expect more decisive hikes.
 
All of this is not a consolation for the markets per se, but it at least goes some way towards restoring the Fed’s credibility and highlights its resolve in fighting inflation.

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