Loading...

Follow DarcMatter Research Center on Feedspot

Continue with Google
Continue with Facebook
or

Valid

Artificial intelligence, also known as A.I. (AI) and/or machine intelligence, is indisputably one of the most trending topics globally.  AI and its integration into real world use cases are already present in various industries.   From Google’s use of AI to diagnose heart diseases, American Express’s use of AI to create smart bots for dissemination of personnel services, and Natixis Investment Managers’ use AI to analyze stock prices and draw conclusions; it would be hard to ignore the world’s fascination, and potential obsession, with everything that has to do with AI.  As we focus specifically on the financial services industry and fintech sectors, AI continues to play a significant role in the evolution and transformation of this industry worldwide.   The financial services industry is generally slow moving and resistant to change, which has resulted in a long lead time for leading industry participants to embrace and utilize AI. However, as core technology and algorithmic enhancements are developed with AI, the industry appears to be accelerating in its adoption of tools.  The speed in which leading firms adapt and utilize AI is a point of contention throughout the industry, with opponents of the movement citing AIs infancy as the primary point of debate. This is, however, partially what excited proponents of AI, the unlimited possibilities!

Within financial services, particularly in regard to trading, there is a common misconception that algorithmic trading is the same as AI.  This is not true.  Although the computer makes the decision in both cases, AI elevates the decision-making process because it aims to imitate the structure of the human brain and continuously learns, unlike a standard algorithm.  These benefits were further evaluated in a research study from the German School of Business and Economics, evaluating the effectiveness of AI on global financial markets.  The data revealed that automated platforms utilizing AI for trading, performed the best during some of the most volatile event cycles, such as financial crises.  AI’s ability to impartially evaluate the risks via processing of numerous data points, coupled with its ability to execute logical calculations without emotional considerations, creates a perfect environment for AI to thrive.  As machine learning continues to develop and understand global trends, the output is a system that is constantly improving its assumptions and predictions about financial markets.

Within the fund universe, use of AI by hedge funds is still new.   Some hedge fund managers rely on AI as a supplemental tool and continue to rely on experienced investment techniques (i.e. managers and their professional experience). Though AI causes some onboarding “friction” that requires additional investments of time for adapting to new methods and setup/maintenance costs, there are many funds/firms that already use machine intelligence for both trading and risk management.  For example, Yoshinori Nomura, responsible for managing the Simplex Equity Futures Strategy Fund, managed one of the first Japanese funds utilizing AI, with assets of about 603.2 billion yen ($5.4 billion) as of September 2018. The Simplex Foundation utilizes Nomura’s software to process a significant amount of data to focus on indicators of momentum and trend deviation, making a decision twice a day on whether to purchase or sell futures on the Topix index.  That is only a minor fragment of what AI can provide.  It also determines the position’s size, with a cap at 50%  of fund assets.  AI creates significant appeal in this example because of its ability to completely eliminate human emotional volatility, during a highly emotionally volatile time: Brexit.  Other funds follow this example of the Simplex Foundation. According to Preqin, there are about 1,360 hedge funds that are currently making a majority of their trades with the help of machine intelligence. These funds are managing about $197 billion USD in total. Additionally, approximately 40% of the funds that opened in 2017, use “systematic” trading.

As we look at the macro level,  financial firm giants are starting to implement AI as well, particularly due to industry trends such as declining revenues, questionable fees, and the general size of compensation for managers, constantly raising concern. According to forecasts, assets managed by automated advisors will grow up to $8.1 trillion in 2020.  AI provides a key opportunity for these firms, which benefit from the time and effort saved from requiring a trader to perform actions such as analytics, forecasting, data mining, and high-frequency trading.

In December 2016, Bridgewater Associates, which manages about $150 Bn, created a project to automate decision-making for its highly data driven firm. The firm created a team of programmers specializing in analytics and artificial intelligence, dubbed the “Systematized Intelligence Lab” in analytics and artificial intelligence, dubbed the “Systematized Intelligence Lab” in early 2015. This team was tasked with developing various applications. Many of these tools were early applications of PriOS, the overarching management software mandated to make more than three-quarters of all management decisions within five years.  This showcases the significant importance some of the largest financial firms are placing on machine intelligence.

Another financial giant, Morgan Stanley, formally launched the initiative, “Next Best Action,”  to more than 20,000 financial advisors and employees earlier this year.  The technology works by evaluating communications with clients from  emails, texts and other notes. It then applies machine learning to evaluate other ideas that can be recommended to the client.

Aidyia Limited, an asset manager in Hong Kong, launched a hedge fund that is fully managed by artificial intelligence. It can read news in several languages, analyze economic data, identify questionable patterns, predict market trends and invest.  With this type of AI adaptation, it is highly likely that an increasing number of Investors already have a portion of their investment portfolios influenced and/or managed by AI!

Conversely, opponents of AI note, rightfully so, that although AI is developing and improving, currently it is not smarter than human intelligence. Though it certainly works faster, this is primarily attributed to its design architecture: perform specific tasks with specific parameters, quickly. There has been significant investment from financial firms, particularly with hedge funds, investing in AI upgrading and trading technologies.  This proved to be a rather profitable strategy for about 2 years. Before 2018, the Eurekahedge AI Hedge Fund Index gained an average of 10.5 percent annually since its 2011 inception. This year, this metric, composed of 15 funds, has shown little change.

AI’s imperfection is clearly demonstrated by funds such as, Sentient Investment Management, the fund that used “artificial intelligence techniques, including machine learning and so-called evolutionary algorithms, to trade stocks globally,” released plans to liquidate in autumn 2018. The fund managed less than $100 million and has not made money this year after gaining 4 percent in 2017.

As with many technological advancements, as the industry begins to adapt, the workforce then follows suit. AI’s ability to replace a human workforce, is a real concern and fear for many financial industry participants.  There is a strong belief that the widespread use of AI technologies in the financial sphere will deprive many traders of work. Using Goldman Sachs as an example, 600 traders worked with the firm 18 years ago. Today, 2 of those roles still exist, and the others  were replaced by machines. General statistics from Opimas forecasts 90,000 jobs in asset management,  almost a third of the worldwide total, will be eliminated by 2025 because of AI.

Another core problem for the financial services industry and AI, is how the technology adapts to identifying and managing privacy concerns.  From a technology perspective, the integration of blockchain solutions for financial services, will have a significant impact on the way AI is utilized, particularly as it pertains to permissions and transparency.  Privacy concerns become prevalent because AI requires a great deal of data, which could include highly privatized information.

Nevertheless, many specialists agree that AI is a technology of the future and will play a role in the future of trading as well. Of course, there is no miracle algorithm that will capture all of the capital gains in the world without the participation of a trader.  Human intelligence still remains an important link  to define the fund’s strategy and take action.  Although AI and machine learning technologies have proved to be quite effective, investment management firms should continue to experiment and proceed with caution as the initial applications for the industry continue to be developed.

The post AI and Portfolio Management, Who’s Calling the Shots? appeared first on DarcMatter Resource Center.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Sharing Insights and Trends from South Korea’s Financial Services Industry 

As we continue to expand our clientele throughout South Korea, the DM Korea Team will share a quarterly market outlook report, highlighting insights directly from South Korea’s alternative investment sector.

We believe, one of the most interesting markets for many asset managers, particularly alternative asset managers, has been South Korea.  As the region continues to allocate capital to alternative investment opportunities, the needs and objectives of these allocators, may become more complex. South Korean institutional investors, such as pension funds and other financial institutions, have been steadily increasing their alternative investment allocations, both locally and abroad, which is primarily attributed to the low interest rate environment and mandates for longer term investment products with less volatility. Source: KOFIA


*Excludes pension funds such as NPS with AUM US$ 582 bn.

According to the Korea Financial Investment Association (KOFIA), at the end of 2018, total alternative investment asset allocations reached US$159 billion with +8% YoY growth, which represented 31.6% of investment portfolios held by South Korea’s domestic asset management firms. Alternative investment allocation compared to total AUM continued to show steady growth on a yearly basis from 2014 – 2018 (Figure 1.1). Source: KOFIA

Figure 1.2, the steady money inflow into the domestic alternative investment fund since 2014 vs others

In 2018, returns from the traditional means, namely bonds and stocks, were quite disappointing. As a result, some of the major domestic pension funds recorded a negative annual return, which was the first-time these funds experienced negative returns since the financial crisis in 2008. Poised to be back on the positive, local firms may raise their alternative investment weighting by approximately 3% YoY. Furthermore, studies indicate domestic securities firms, which cater mainly to retail investors, are set to increase alternative investment allocations twofold, from US$ 2.1bn in 2018 to US$ 4.2bn by 2023. Source: Naver News


Given the trending interest in alternatives for South Korean investors throughout the years, what is the current interest of the local market?  As we look at 2018, Figure 1.3 shows interest in Infrastructure (Public Private Partnership – PPP) and Real Estate allocations, representing close to 70% of total alternative investments in 2018. In terms of geography, in the case of the real estate, traditionally North America was the main destination for the domestic institutional investors. However, recently the emergence of European assets extending to a few Eastern European cities, are of particular interest. Taking a deeper look into this trend, a recent survey from an alternative investments conference revealed the preferred destination for real estate investment has shifted to Europe, primarily due to steep valuation and relatively high swap costs, which is of interest to the South Korean market. Source: Bank of Korea

*USD/KRW = 1,117 as at 12/31/2018

For more information on DarcMatter, DarcMatter Korea, and/or Alternative Investments on DarcMatter, visit:  https://darcmatter.com/ OR email us at ASK@darcmatter.com

The post South Korea Alternative Investment Outlook: Q1 2019 appeared first on DarcMatter Resource Center.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

DarcMatter (DM), the global award winning FinTech platform for alternative investments was invited to participate in the leading fintech roundtable discussion, hosted by the Seoul Metropolitan Government earlier this year.  DarcMatter Korea, the team leading the global award winning fintech platform’s expansion through South Korea, was honored and thrilled to participate and share insights on the global asset management industry.

The roundtable was held to seek have an open forum of discussion to enhance the region’s financial competitiveness and to vitalize the fintech and asset management industry, in anticipation of the Fourth Industrial Revolution. As DarcMatter continues to confirm partnerships with key financial institutions throughout the region, the invitation was both timely and indicative of the FinTech company’s increasing presence within the South Korea FinTech and financial services community.

“These are the important discussions and meetings we are honored to take part in,” noted DM’s Head of Korea, Jin Song, “given our company’s global expertise on asset management, alternative assets, and FinTech, we were happy to participate to share our perspectives and experience in utilizing fintech solutions for asset management as a means to gain an advantage in a highly competitive global marketplace.  We look forward to participating in more discussions to move this initiative forward.

Other key participants included the Mayor of Seoul as well as leading members of Parliament, the Financial Services Commission, Financial Supervisory Service, Korea Fintech Industry Association, and Korea Fintech Network.  DarcMatter has participated in various discussions and conferences throughout South Korea, centered around fintech and asset management. Most recently, DarcMatter’s leadership team was invited to speak at the Jeonbuk International Financial Conference in the Jeollabuk-do region, which included participation from distinguished officials such as NPS Chairman and CEO Sung Joo Kim, NPS CIO Hyo-Joon Ahn, Governor Ha-Jin Song, Congressman Sang Min Lee, and many more.  The company looks forward to participating in many more events supporting the fintech and asset management industries throughout South Korea.

다크매터, 서울시 주최 핀테크-자산운용 기업 간담회에 초청

글로벌 핀테크 대체투자 플랫폼 다크매터가 1월 말 서울시에서 주최한 금융산업 발전을 위한 핀테크-자산운용 기업 간담회에 초청받아 참석하였다. 다크매터의 한국 내 확장을 담당하는 다크매터 한국 지사는 글로벌 자산 운용 업계에 대해 식견을 공유하게 되어 영광이라고 설명했다.

이번 간담회에서는   4차 산업혁명 시대 금융환경 변화에 대응한 핀테크-자산운용업 활성화와 금융산업 경쟁력 강화를 위해 토론의 장을 마련하였다. 지역 내 중요 금융 기관과의 파트너십 체결 지속은 물론, 이번 간담회 초청은 국내 핀테크 및 금융 서비스 분야에서 다크매터가 입지를 드러내고 있음을 시사했다.

송진구 다크매터 한국 대표는 “다크매터가 국내외 중요한 간담회에 초청받을 수 있어서 영광이며 자산 운용, 대체 자산, 그리고 핀테크에 관한 다크매터의 글로벌 전문성을 고려했을 때, 경쟁력 있는 글로벌 시장에서 우위를 점하기 위한 자산 운용 내 핀테크 솔루션 활용에 관해 회사의 시각과 경험을 공유할 수 있게 되어 기쁘다”고 설명했다.

이번 간담회의 주요 참석자로는 서울시장, 국회의원, 금융위원회, 금융감독원, 한국 핀테크협회 등이 있다.

다크매터는 국내 핀테크와 자산 운용 관련 컨퍼런스와 행사에 다양하게 참석 중이며, 최근 국민연금 CEO와 CIO, 전라북도지사 등 업계 관련 인사가 참석한 전북 국제 금융 컨퍼런스에 연사로 초청받은 바 있다. 다크매터는 국내 자산 운용사들과 핀테크에 관련된 다양한 행사에 지속적으로 참석할 예정이다.

DarcMatter에 대해서:

DarcMatter는 전 세계 대체 투자 업계가 갖는 불투명성과 비효율정의 제거 증진을 제공하는 대체투자를 위한 세계 핀테크 플랫폼 어워드의 수상 회사입니다. 2014년에 설립된 DarcMatter 플랫폼은 투자운용사(GP)가 적극적으로 모집한 자본을 전 세계 투자자(LP)들과 연계시키고 있으며, 온라인 상에서 이해당사자들 간의 연결과 펀드 관련 문서들의 접근을 원활하게 함은 물론, 헤지펀드, 사모펀드, 벤처캐피탈펀드에 효율적으로 투자할 수 있도록 지원합니다. DarcMatter는 2018년 핀테크 도약을 위한 “Retail Investment Innovation Award”에 수상하였으며, “Company of the Year in Banking and Financial Services”에서도 수상하였습니다. DarcMatter는 뉴욕에 본사를 두고 있으며 상하이와 홍콩, 서울의 총 3곳에 사무소를 운영하고 있습니다.

For more information on DarcMatter, visit our homepage: https://darcmatter.com/

The post DM Participates in Leading FinTech Asset Management Roundtable Hosted by Seoul Metropolitan Government 다크매터, 서울시 주최 핀테크-자산운용 기업 간담회에 초청 appeared first on DarcMatter Resource Center.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

DarcMatter is honored to take home THREE big wins from The 2018 Women in Business Stevie Awards that took place on November 16th in New York City.

The Stevie Awards are the world’s premier business awards and have become one of the world’s most coveted prizes. Out of over 1,500 applicants from over 33+ countries, DarcMatter placed in three categories: DarcMatter placed Bronze in Company of the Year, and Co-Founder and COO, Natasha Bansgopaul won Gold in Female Executive of the Year as well as Silver for Female Entrepreneur of the Year.


“Winning a Stevie Award is actually an amazing accomplishment for our organization. Stevie Awards are known internationally and as an international business it’s very important for us to continue to win accolades and achievements like this,” says Bansgopaul. “We are honored to be shortlisted and winning at the Stevie Awards this year.”

A big congratulations to Kelly Simpson-Angelini from Simpson Healthcare Executives, who won Gold for Female Entrepreneur of the Year! Also, we want to extend our congratulations to Erin McCafferty from Apple Growth Partners, and Debra Bar from Bank Leumi USA who placed Silver in Female Executive of the Year.

DarcMatter is excited and proud to be recognized among these names and other women executives, entrepreneurs, and the organizations this year at the Stevie Awards.

See below for coverage on the evening and Natasha’s words on the wins.

DarcMatter wins in the 2018 Stevie® Awards for Women in Business DarcMatter wins in the 2018 Stevie® Awards for Women in Business

The post DarcMatter Takes Home Three Wins From The 2018 Women in Business Stevie Awards appeared first on DarcMatter Resource Center.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

As part of our DarcMatter Manager Series, we took the opportunity to interview the team at Corigin Venture Fund, about the background of the firm, their strategy, and their management team. For more information, visit Corigin Venture Fund Profile here on DarcMatter. 

What is the history and background of your company, principals, and funds? 

The two GPs, Ryan Freedman and David Goldberg, are both entrepreneurs at heart. Ryan is a company builder and connecter, and reports to have built a real estate operating business with 80 employees and $500M+ of AUM. David is an operator turned investor, and a member of the Kauffman Fellowship Class 22. Prior to Corigin Ventures, David was the Founder/CEO of Freshneck, which was acquired by Tie Try.

David and Ryan came together and aligned on the shared mission that outside support and mentorship, especially at the earliest stages, can have a driving influence on outcomes. Corigin Ventures launched and began investing in 2012. Fund I was a $20M “proof of concept” fund to see if we could source, analyze, win deals, and add meaningful value to our founders.

With the learnings and insights of Fund I and an institutional grade team of six, we are now scaling our strategy to Fund II, a $50M vehicle. The strategy will remain the same in terms of stage and sectors, with the only difference the ability to truly lead deals. We have completed a first close of $22M and have 12 deals already in the portfolio.

Please explain the investment process for the strategy. 

Corigin Ventures seeks to be the most impactful partner at the earliest stages of a startup’s life cycle (seed stage). First and foremost, we lead deals. This gives us first access to deal flow, an ability to control the terms and cap table, and starts the foundation of an intimate relationship with the founding team.
We target a 10% ownership stake with our first investment by investing approx. $1M. We have experience and deep networks across consumer products & services, real estate technology, and marketplace models.

You discussed your investment strategy in Question 2. Why should investors consider your fund in comparison to others with similar strategies? 

In addition to being one of the few Seed stage funds that can truly lead a deal, we view relationships as a competitive advantage. We believe that what differentiates the best investors is the ability and dedication to build meaningful and authentic relationships across the startup ecosystem. We intentionally design and build our operations to be at the intersection of our core competency (EQ) and founders’ greatest ask (supportive relationships).

· Sourcing: we use relationships built over careers to connect with the most promising entrepreneurs in the sectors that we target
· Analysis: with minimal data at the seed stage, our analysis focuses on the founding team – both their dynamics amongst each other as well as their founder market fit
· Post-investment value-add: a dedicated platform team and strategy to enhance founders’ relationships with key stakeholders – his/her team, customers and investors
· Portfolio construction: we reserve 60% of the fund for follow-on investments, leveraging our information arbitrage that stems from these relationships

How does your fund’s strategy fit within an investor’s broader investment portfolio? 

Early stage venture capital investing is the high risk/high return portion of any sophisticated investor’s diversified portfolio. We have a 20-25% return objective and offer minimally correlated exposure to the broader market. Keep in mind that the return objective range may or may not be achieved.

Please tell us either your highest conviction idea or trends that you find particularly interesting within your fund’s investment universe. 

One of the largest industries that is late to the innovation game is real estate. We believe it is the largest asset class in the world, yet the most antiquated industry. We have been bullish on “PropTech” since 2012 and believe that we are still in the very early innings. As an owner of a real estate portfolio with deep network and expertise, we lever our physical assets to move the needle post-investment.

We use our real estate portfolio as a testing pad with rapid deployment, which provides us real-time insights and feedback. We also leverage our network to help supercharge sales for our founders.

What are your views on the current macro landscape? 

One of the largest (and most well known) trend is that companies are staying private later, and there is a ton of capital in the late stage venture universe. As a result of all this late stage private money, we are seeing opportunities for true M&A activity, as well as secondary liquidity options for early stage investors. We have purposefully sized our fund where these types of “smaller” outcomes ($50-100M) can be meaningful to our shareholders’ bottom line versus larger funds that require massive exits to move the needle.

What keeps you up at night? 

The type and mindset of an entrepreneur has shifted over the past 5 years. Raising capital is the “cool” thing to do and has become a status symbol. We believe that this trend makes it harder to find the diamonds in the rough – entrepreneurs who are truly mission driven and dedicated to riding the inevitable ups and down to get to large outcomes. We try and mitigate this by focusing much of our analysis not on business models, but on the founders themselves, their motivations, and their values.

What are the risks of your strategy? 

Like any venture capital firm, the biggest risk is the 80/20 rule (power law). The majority of your outcomes will be driven by a handful of investments. Secondly, given that our initial checks come in at the Seed stage, we recognize that the vast majority of our companies will need to raise additional capital. We’ve tried to mitigate this risk by building targeted relationships with leading investors in the Series A space. In addition, we’ve reserved 60% of our fund for follow-on capital (Series A & Series B). This allows us to double or triple down on our winners and limit our allocation to the losers.

Venture Capital investors should keep in mind that investments in early-stage startups have drawbacks such as their high-risk level, limited transferability, long-time investment horizon, illiquidity, and capital calls. There is no guarantee that this investment will meet its investment objectives and this investment bears the risk of partial or complete loss of capital.

Securities offered through North Capital Private Securities, Member FINRA/SIPC.

The post DM Manager Series – Corigin Ventures Fund appeared first on DarcMatter Resource Center.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

As part of our DarcMatter Manager Series, we took the opportunity to interview the team at Infusion 51A LP,  about the background of the firm, their strategy, and their management team. For more information, visit Infusion 51A LP’s Fund Profile here on DarcMatter. 

What is the history and background of your company, principals and funds?

Infusion 51a was founded on the principal that there are plenty of novel technologies that would thrive if developed yet fail for a variety of reasons. I have personally witnessed therapeutics that work without question and would save lives yet never are developed due to reasons unrelated to the technology. We look for opportunities we feel we can successfully identify the impediments and implement a plan that will solve the challenges that hold the company back from success.

Please explain the investment process for the strategy. 

First step is conducting thorough due diligence and determining if and what the path forward will be. It is essential that we understand the current and future roadblocks and proceed only if we have a high degree of confidence that we will be successful in overcoming such challenges. If we proceed, the first step is to secure the proper foundation and control that will ensure we have the authority needed to implement our strategy. We do this by structuring a team that will focus on the proper management and the financial solvency. Once the company is properly positioned, we transition from active operational leadership to more of a board management philosophy while managing the exit process.

You discussed your investment strategy in Question 2. Why should investors consider your fund in comparison to others with similar strategies?

We have put together an exceptional team and group of asset’s that we believe have the ability to outperform. In addition, the current state of our assets is further along in the investment process which can result in lower risk from the inception of the investment and is closer to realization events thus a possibility for short term growth.

How does your fund’s strategy fit within an investor’s broader investment portfolio?

Our fund would fall into the high growth/high risk speculative bracket. By being 3 years old, current investors are entering into a position of the ground floor yet have the advantage of seeing the progress made during that time. Our ability to scale presents an opportunity for investors who are in the accumulation stage of their portfolios to potentially outperform.

Please tell us either your highest conviction idea or trends that you find particularly interesting within your fund’s investment universe.

We are committed to good science with a need, being ran by capable people able to develop and scale.

What are your views on the current macro landscape?

We believe that the macro landscape is shifting. You are seeing an economic transition globally. We believe that there will be a growing focus on fundamentals as the world contracts.

What keeps you up at night?

Making sure that we are exceptional finishers, thus meeting our commitments to our investors.

What are the risks of your strategy?

As a newer fund we focused on starting with a limited number of positions. In the short term, this created a diversification risk. In addition, there is the capitalization and execution risk that comes along with newer funds.

Visit DarcMatter.com to Register and Learn More about Straits Financial Premier Fund and other funds on DarcMatter here: Browse Fund Profiles

View other DM Manager Series Interviews HERE

Private Equity investors should keep in mind that investments in early-stage startups have drawbacks such as their high-risk level, limited transferability, long-time investment horizon, illiquidity, and capital calls. There is no guarantee that this investment will meet its investment objectives and this investment bears the risk of partial or complete loss of capital.

Securities offered through North Capital Private Securities, Member FINRA/SIPC.

The post DM Manager Series – Infusion 51A LP appeared first on DarcMatter Resource Center.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

As part of our DarcMatter Manager Series, we took the opportunity to interview Wissam Otaky, one of the founders of Hatcher+ about the background of the firm, their strategy, and their management team. For more information, visit Hatcher+ Fund Profile here on DarcMatter. 

What is the history and background of your company, principals and funds?

Hatcher+ was founded by John Sharp, Dan Hoogterp and I in 2016. We are an early stage venture investor that uses the power of Artificial Intelligence, global partnerships and diversified portfolio theory with the objective of beating other public benchmarks. We aim to achieve this by using our proprietary resilient investment model to guide our deployment alongside a global network of co-investment partners. Having analyzed the venture capital industry, including best practices, investment strategies, and outcomes, we now leverage a large database of venture investment events. All of the partners come from the venture world, with years of entrepreneurial activity behind us, and recent experience as investors, mentors, researchers, and technology developers. Our firm was recently awarded “Most Innovative Venture Capital Technology” by World Finance Markets magazine. Hatcher Pte Ltd, an investment holding company which was founded in 2012 and managed by John and I, has achieved three complete investment cycles (ideation to exit, including two trade sales and a public listing).

Please explain the investment process for the strategy. 

We spent years analyzing the industry, including looking at over 450,000 venture investment events, in building our resilient investment model. Our findings were straightforward: 1. The early stages in venture can be the most profitable 2. Attracting quality deal flow is critical to success 3. We believe Large portfolios deliver consistently higher returns. However, building a high quality, early stage portfolio as large as we needed it to be required significant innovation on the traditional venture model. Our targeted returns called for over 2,000 investments in 1,300 companies around the world, through the life of our fund. Such scale is multiples larger than what a standard venture firm achieves. We execute on our strategy through a unique combination of technology and global co-investment networks. Over the past two years we built partnerships with early-stage investment groups, including accelerators, incubators, micro-VCs and venture builders around the world. These relationships secure Hatcher+ the right to co-invest alongside every partner in every deal that they invest in ultimately allowing us to reach our target portfolio of 1,300 companies from around the world and across industries. Our partners also get access to our proprietary technology – the Hatcher+ Stack Predictive API – that helps them assess the submissions they receive using AI and machine learning approaches, as well as run their investment programs and monitor their portfolios.

You discussed your investment strategy in Question 2. Why should investors consider your fund in comparison to others with similar strategies?

We believe that we are ahead of the competition in how we approach venture. While there are many firms trying to use technology to help in portfolio selection, we believe we are the only one that has created a data-driven strategy using a unique combination of in-house technology and existing global partnerships to build as diversified a portfolio as required to achieve our return objectives.

How does your fund’s strategy fit within an investor’s broader investment portfolio?

We believe our strategy fits well within a diversified investment portfolio. Our portfolio objective is to have a low correlation with the Nasdaq while aiming to consistently beat it as a benchmark. While venture will always be a high-risk asset class to invest in, we believe that our approach reduces that risk in comparison to traditional models.

Please tell us either your highest conviction idea or trends that you find particularly interesting within your fund’s investment universe.

Venture as a whole, and specifically the early-stage space, is undergoing a tectonic shift, as the availability of data and computing power opens up the industry itself to the transformative influence of technology. The proprietary artificial intelligence and machine learning tools we created allow a deeper understanding of startups and similar business opportunities at a much earlier stage than previously attempted. We believe Innovations such as this and others may transform how investment opportunities are identified over the coming period. We aim to lead that transformation.

What are your views on the current macro landscape?

There is a lot of uncertainty at the moment around where the macro-economic cycle is headed, especially with respect to all the trade issues currently being discussed. This uncertainty is clear in the movement of public markets. However, the growing crop of Venture backed businesses conducting IPOs could generate much needed liquidity, part of which may find its way back into venture investments, continuing to drive interest in the early stage space.

What keeps you up at night?

My excitement. We believe that what we are doing at Hatcher+ today is nothing short of reinventing the early stage investment space. As with any business, there are lots of moving parts, things to do, deadlines etc., but I am used to all of that as I have been in the entrepreneurial world my entire life. However, seeing our strategy getting executed day after day gets me excited, and keeps me awake thinking of the possibilities.

What are the risks of your strategy?

The biggest risk we face is maintaining access to quality dealflow. We build co-investment partnerships with sector and geographic champions around the world to get access to the companies we invest in and therefore need to foster and maintain these relationships. In addition to managing the existing relationships we have, we also continuously monitor the ecosystem globally to ensure we are aware of any strong new players that should be added to our network.

Visit DarcMatter.com to Register and Learn More about Straits Financial Premier Fund and other funds on DarcMatter here: Browse Fund Profiles

View other DM Manager Series Interviews HERE

Venture investors should keep in mind that investments in early-stage startups have drawbacks such as their high-risk level, limited transferability, long-time investment horizon, illiquidity, and capital calls. There is no guarantee that this investment will meet its investment objectives and this investment bears the risk of partial or complete loss of capital.

Securities offered through North Capital Private Securities, Member FINRA/SIPC.

The post DM Manager Series – Hatcher+ appeared first on DarcMatter Resource Center.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

As part of our DarcMatter Manager Series, we took the opportunity to reconnect and interview the team at Straits Financial Fund Management LLC, about the background of the firm, their strategy, and their management team. For more information, visit  Straits Financial Premier Fund, here on DarcMatter.

What is the history and background of your company, principals and funds?

The Fund Manager of Straits Financial Premier Fund I, Ltd. is Straits Financial Fund Management LLC (“SFFM”), a NFA and CFTC fully registered and licensed Commodity Pool Operator.  Its product is a professionally managed Futures Fund designed to meet the investment objectives of Institutional and Accredited Investors.  The product is offered in smaller investing amounts of $10,000 to both U.S. and non-U.S. investors in two Feeder Fund formats:  Straits Financial Premier (U.S. Feeder) Fund I, L.P. and Straits Financial Premier (Offshore Feeder) Fund I, Ltd. (“the Funds”).
More Information can be found via link below:
www.straitsffm.com and on affiliate at www.straitsfinancial.com and on parent companies:  www.cwtlimited.com and www.hnagroup.com.

Principals
Joseph Mazurek
            Mr. Mazurek, born 1956, became a registered AP of the General Partner in December 2013 and has been listed as a principal of the General Partner since December 2013.  Mr. Mazurek is also the President of the General Partner, where he is responsible for overseeing the business strategy, sales and operations of the General Partner, including its arrangements with the Fund, Offshore Feeder Fund and Master Fund.
Mr. Mazurek is also currently the President of Straits Financial LLC, a futures commission merchant, a position he has held since October 2010.  As President of Straits Financial LLC, Mr. Mazurek is responsible for the administrative, sales and operations of the firm.  In regard to Straits Financial LLC, Mr. Mazurek has been: (i) registered as an AP since March 2011, (ii) approved as an NFA Associate Member since March 2011, (iii) registered as a swaps AP since May 2013, and (iv) listed as a principal since October 2010, all through the date of this Memorandum.
 
Joseph R. Randazzo
Mr. Randazzo became a registered AP of the General Partner in December 2013 and has been listed as a principal of the General Partner since December 2013. Mr. Randazzo is also a Managing Director of the General Partner, where he is responsible for overseeing the business strategy and sales of the General Partner.
Mr. Randazzo is also currently a Senior Vice President of Straits Financial LLC since May 2011. He became a registered AP of Straits Financial LLC in November 2011 and has since been responsible for the development of the Managed Futures product as well as developing futures and foreign exchange sales and he has been registered as the branch manager of the Straits Financial office in Red Bank New Jersey since July 2012.

James F. Curley
Mr. Curley became registered as an AP of the General Partner in December 2013 and has been listed as a principal of the General Partner since December 2013. Mr. Curley is also a Managing Director of the General Partner, where he is responsible for overseeing the business strategy and sales of the General Partner.
Mr. Curley is also currently a Senior Vice President of Straits Financial LLC, a position he has held since May 2011. As a Senior Vice President, he has responsibility for the development of the Managed Futures product as well as developing futures and foreign exchange sales. In regard to Straits Financial LLC, Mr. Curley became registered as an AP in November 2011.

Please explain the investment process for the strategy.

Offered in smaller investing amounts of $10,000 to both U.S. and non-U.S. investors in two Feeder Fund formats the Funds permit investor participation in alternative investment strategies, a recognized component of diversified and balanced investment portfolios.  The program is uncorrelated to Equities, Bonds, or other Alternative Investments and allows exposure to liquid, transparent markets with an experienced Trading Advisor – Dunn Capital Management.

The goal of the Futures Fund is to bring one of the largest and most experienced Commodity Trading Advisors to the smaller retail investor.  Dunn Capital Management, LLC (“Dunn”) was chosen to conduct trading on behalf of the Master Fund.  An investment in one of the Feeder Funds allows investor access to Dunn’s World Monetary and Agriculture (“WMA”) Program, a program that has been successfully traded for 30+ years.

WMA is a 100% systematic medium to long-term trend following program, encompassing a portfolio of financial, energy, metal and agricultural futures contracts.  The investment objective of Dunn’s WMA Program is to extract profits from up and down trends, resulting in a return stream that exhibits very low correlation with traditional asset classes.

It is quantitative, statistical and 100% systematic.  There are no discretionary overrides of any computer-generated signals.  The program is designed to capture major trends and to scale risk exposures.  The latter is managed via a proprietary “Adaptive Risk Profile” program which was designed to adjust to changing market conditions.

Positions are established on regulated Futures Exchanges where price, volume and open interest are totally transparent.  There are no SWAPs or other OTC esoteric, hard to price or exit contracts traded.

You discussed your investment strategy in above. Why should investors choose your fund over others with similar strategies?

There are many other “commodity pools” available to investors but Straits believes its offering is unique. Some of the reasons why are:

  • The Pool Operator and Trading Advisor are fully licensed and registered. Straits has been in operation since 2010 and is the financial arm of very large parent organizations. Dunn has been in business over 40 years and their WMA flagship program has been successfully traded over 30 years. It has had a 13.7% compounded annual rate of return for over the last 30 years (net of fees and expenses).
  • Dunn’s direct WMA offering is available only to Qualified Eligible Participants (“QEP”) as defined by CFTC Regulation 4.7. Through the efforts of Straits Financial Fund Management and Premier Fund I, access to WMA is now available to Accredited Investors. It is a less restrictive regulatory barrier allowing broader participation to a program usually restricted to only the wealthiest investors.
  • Approximately 20% of total program Assets under Management (“AUM”) is proprietary – owners and employees of Dunn are invested alongside clients in exactly the same trading programs. As of September, 2017 the WMA programs have in total AUM of $851 million. The CTA’s own “skin” is in the game.
  • There is a low correlation with traditional asset classes (stocks, bonds, real estate). 54 commodity futures are currently traded such as Energy, Agricultural, Volatility, Long and Short-term Interest Rates, Foreign Exchange, Stock Indices and Metals.
  • Dunn applies an evidence-based systemic approach to identify and exploit trends in a diverse portfolio of markets, across all sectors. They can be classified as medium to long-term trend following strategies. Dunn’s research process is highly disciplined with continual focus on generating low-correlated revenue streams.
  • And, there are annual audits; clean regulatory history; no personal employee futures accounts; 24/7 trading desk; current BCP procedures; trading only products on regulated Exchanges; third-party independent pricing; daily review of all transactions and Value-at-Risk; daily check-out with clearing FCMs, no buy or sell option trading, etc.
  • More product details, comparisons to other programs, financial ratios, etc. can be supplied upon request.

How does your fund’s strategy fit within an investor’s broader investment portfolio?

As stated earlier, Premier Fund I offers access to a well-established CTA and their trading program whose access is normally restricted to the wealthiest of investors. Instead of allowing only Qualified Eligible Participants (“QEP”) with a worth of $10 million or greater, Premier Fund I permits access to Accredited Investors. They need only $1 million in worth exclusive of their home and they can invest as little as $10,000.

This permits the smaller retail investor access to a top CTA whose trading program is normally restricted to the wealthiest of investors.

$1,000 invested in WMA in 1984 would have generated $67,600 in profits as of 2018. In contrast, the S&P would have generated $35,036. Barclay’s CTA Index would have returned $9,726.

That, along with fair fees, no long-term lock-up of funds (monthly additions and redemptions), and no cost to exit makes Premier Fund I an attractive addition to anyone’s portfolio.

Please tell us either your highest conviction idea or trends that you find particularly interesting within your fund’s investment universe.

The Fund has “Stood the Test of Time”. The WMA has been actively traded for over thirty years by a CTA in business over forty years. They routinely out-perform their competition and the markets both in good times and bad.

WMA has provided non-correlated returns during periods of equity market stress. Since 1984, the five worse years for the S&P 500 (1990, 2000, 2001, 2002, 2008) had the WMA with an average return of 34.25%. In contrast, the S&P returned 16.64% and the Barclay’s CTA Index 11.23%.

The five best years (1985, 1989, 1995, 1997, 2013) had the WMA with an average return of 37.26%. In contrast, the S&P returned 33.47% and the Barclay’s CTA Index 10.07%.

Straits sees these trends continuing and it is the main reason why Dunn was chosen to trade the pool. They have the experience, the trading program, the risk controls, etc. that are normally only available to larger investors and in larger amounts. Through its efforts, Straits is able to bring this program to the smaller investor at levels that can fit very well within most portfolios.

What type of macro environment do you perform best in and how are you positioned for the current macro landscape?

Bull market. Bear market. Straits says “Bring it on”.

Unlike many markets, Futures allows both buying (Bullish) and selling (Bearish) trading with equal ease. There are no short sale rules and, because all transactions are conducted with established futures contracts on established and regulated Futures Exchanges, all trades are totally transparent. The price of the trade, the number of contracts traded and the final settlement price are all crystal clear and settled daily by the Futures Commission Merchant (Straits) with the Exchanges.

There are no esoteric, hard to price, difficult to exit products traded. As shown above, WMA has since 1984 out-performed the S&P 500’s five best and five worse years. It has also out-performed a basket of CTA performers tracked by Barclay’s.

For Straits and its Premier Fund I product it does not matter if the equity, bond, interest rate, energy, metal, etc. markets are strong, weak or flat. WMA has been designed to manage to all those scenarios.

What keeps you up at night?

When it comes to Premier Fund I, very, very little keeps me awake at night. That is not by accident.

When the pool was conceived we decided we wanted to do everything the right way. That is why we chose Dunn. It was why we engaged legal counsel Backer & Mckenzie, Chicago and Walkers Global, Caymans to craft the Private Placement Memorandum. It was why we chose Apex Fund Services for administration, statements and customer portal. It is why we use Straits the FCM to clear the Fund’s trades, BMO Harris Bank to hold the customer funds on deposit and Squar Milner to conduct the firm’s yearly audit.

Our goal was to create a product that would proudly carry the Straits name and meet the investment needs of investors looking to diversify their portfolios.

We believe we have been successful!!!

Visit DarcMatter.com to Register and Learn More about Straits Financial Premier Fund and other funds on DarcMatter here: Browse Fund Profiles

View other DM Manager Series Interviews HERE

The post DM Manager Series – Straits Financial Fund Management LLC appeared first on DarcMatter Resource Center.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

As DarcMatter’s platform continues to work with alternative fund managers interested in reaching investors globally via efficient online channels, we thought it would be important to share some insights and research on an asset class within alternatives that has recently become a focus of news and attention from the array of accredited investors.

From RIA’s to UHNWIs (Ultra-high-net-worth-individuals) actively participating in the crypto economy, and Family Offices to Institutions simply information gathering to potentially enter at the right time, it is clear that the interest in entering the crypto-verse is ever-present. The specific interest in crypto funds is driven by the perception of safety via a more familiar fund structure as compared to investing directly into cryptoassets as an individual. Crypto funds allow interested investors to participate in the “new” and “exciting” market that has seen both its share of great success and great volatility on a daily (if not hourly), basis.

As we continue to build momentum for DarcMatter’s blockchain project (through DarcMatter Coin), we wanted to share some information on the growing crypto fund market and share some perspectives on this asset class’s viability for investors who are interested in participating in the crypto-verse via a crypto fund.

What is a “Crypto Fund” and Why is it of Interest in Alternative Investments?

A crypto fund is exactly what it sounds like. It is generally a hedge fund in which the investment strategies are based on crypto assets. Though there are other structures that more closely resemble a Private Equity or Venture Capital structure, there are far more crypto hedge fund structures available for investors to access. The premise behind creating a crypto fund is to make it easier for investors to access and navigate through the crypto investment market, by deferring to a professional crypto manager, also known as the portfolio manager in the traditional manner. This portfolio manager, will potentially manage the LPs investment into various cryptocurrencies (such as Bitcoin, Ethereum, Litecoin, XEM, etc) and ICOs (initial coin offerings), based on the fund strategy. The goal of the fund is to obviously produce gains based on your investment.

Much of the interest in crypto funds is driven by the increased market speculation and the share potential in percentage gains for those that entered the industry at the “right” time. This is not to say that the market is stable, and gains are guaranteed, because the crypto market is extremely volatile, with varying opinions on crypto’s vitality.  However, there is clearly opportunity in chaotic markets like crypto, enabling the creation of crypto funds as an asset class, which is only further substantiated by the 225+ fund managers touting crypto strategies.

As with traditional fund managers, the core job of the manager is to create a specified risk-return strategy and utilize as much information as possible to yield the results that investors expect.  As with much of the investing universe, including stocks and bonds, it increasingly becomes difficult for individual retail investors to find an edge.

Why Should Investors Take Note of Crypto Funds?

In addition to all of the constant news around cryptocurrencies and cryptoassets, it’s important to keep an eye on the ever-changing regulation and legal rulings as it pertains to investment into crypto.  As big institutional players slowly enter the market, this will be one of the final indicators to legitimize the crypto fund as an investment class. Investors are interested in learning more about this asset class as a potential alternative investment product option. The interest from investors is apparent when we see the share growth in the existence of such crypto-funds, as displayed below from Autonomous Research LLC:

The number of crypto funds grew eightfold in 2017 and is also continuing to increase in thus far in 2018 as well. Given the current state of the crypto market, we’ll see how many additional funds are created this year.  We would anticipate this number to be on par with 2017 numbers, however as regulation continues to develop, we would anticipate this making the barriers to entry a bit more difficult while concurrently creating guidelines to allow sophisticated managers and firms to participate growing the market in a new but mature method, with a subset of serious crypto funds for investors to choose from.

The Crypto Fund Universe!

As we continue to do due diligence on crypto funds interested in onboarding on to DarcMatter, we wanted to share some key details on the crypto fund universe, and what we are seeing as key strategies and themes in this emerging investment space.

Crypto Funds: Number of Crypto Funds by Inception and Strategy

Crypto Funds have continued to increase throughout the years, with over 20+ noted for 2018 as of February 2018.

Source: Autonomous Research

ICO Offerings: Initial Coin Offering Industry Trends

Over $5.4B in ICO Offerings were funded 2017, with a significant proportion allocated to Finance, Core Tech, and IoTs. 2018 is following a similar trend, with over $1.5B allocated through January 2018.

Source: Autonomous Research

Institutional Investors Thoughts on Crypto: Legitimate…Fraud…or I have NO Idea…

Over 400 institutional investors were polled at Context Summits conference this year, where cryptocurrencies were a key topic of discussion, especially given the emergence of so many new crypto fund strategies. Given the lack of knowledge and understanding of the crypto markets, it also makes sense that these investors are not likely to invest via crypto funds in 2018. (See second chart below)

Source: Context Capital

Interested in learning more about cryptoassets? Email us at ASK@darcmatter.com
Interested in DarcMatter’s Blockchain Project? Visit: https://dmc.darcmatter.com/

The post The Continuous Rise of Crypto Funds in Alternative Investments appeared first on DarcMatter Resource Center.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Separate tags by commas
To access this feature, please upgrade your account.
Start your free month
Free Preview