Sovereign Wealth Funds and GCC Investors Shifting to “Endowment Model”; with Increasing Dependence on Hedge Funds, Private Equity and Venture Capital
Dubai, United Arab Emirates, ME NewsWire: The St. Regis Hotel in Al Habtoor City opens its doors on November 1st to one of the region’s most exclusive audiences, restricted to CEOs, CIOs and senior decision makers collectively managing an estimated 10 trillion dollars in assets or more. The region’s largest event for hedge funds, private equity and venture capital is set to convene 400 major institutional investors and family offices with some of the world’s best fund managers. AIM Summit is proud to welcome preeminent figures in alternative investments to discuss the changing dynamics of GCC asset allocation in the “New Oil Normal” and an era of low financial market returns.
“The ‘New Oil Normal’ is leading to a transformation of the economies of the oil and capital exporters of the Middle East. Governments are facing the twin challenges of budget and current account deficits, while undertaking structural reforms aiming to diversify their economies, their sources of revenue and diversify their exports to reduce dependence on energy,” comments Dr. Nasser Saidi, founder and president of Nasser Saidi & Associates,
“New fiscal regimes and taxation will be part of the landscape and sovereign wealth funds can no longer plan on a steady inflow of funds from government surpluses dictating a shift in investment strategies and a greater focus on supporting government economic diversification policies.”
With oil revenues at low levels, governments in oil rich countries with large sovereign wealth funds must increasingly rely on investment returns generated from their accumulated reserves to support widening fiscal deficits. Preserving real value for future generations while drawing on financial reserves is forcing these investors to shift to the “Endowment Model” of portfolio allocation, similar to the strategies employed by Harvard, Yale and other large University Endowments. Endowment Funds rely heavily – in some cases almost entirely – on Hedge Funds, Private Equity and other “Alternative Investments” to generate high returns and manage the competing forces of high expenditure requirements and preservation of intergenerational equity.
Challenges for Alternative Investment Managers in a Low Return Environment
While the region’s investors search for higher returns from Alternative Investments, investment managers find them increasingly hard to find in an era of low yields, high valuations and diminishing risk premia. These investment managers also face increasing regulatory requirements and higher barriers to entry, increasing the cost of managing funds while investors demand lower fees. Leading hedge fund managers and private equity houses at AIM Summit discuss “New Alternative” strategies for generating excess return or “Alpha” for their investors.
Dalma Capital, the lead supporter of AIM Summit, is at the centre of the New Alternative. “We are a platform for hedge funds, private equity firms, venture capitalists and investors – we provide a unique combination of services to help investors and fund managers connect to identify, extract and maximize Alpha.” says Zachary Cefaratti – Senior Executive Officer of Dalma Capital Management, “Alpha erosion is natural as markets tend towards efficiency – our model has been designed to make alpha generation by hedge funds and private equity firms more efficient, nimbler and less capital intensive without compromising the robust operational and regulatory infrastructure sophisticated investors demand.”
Risks and returns in an asset-inflated world: challenges and opportunities
Gary Dugan, CIO of Emirates NBD, paints the background at the conference with a global economic and market outlook, “As I look into 2017 it appears to me that the global economy and financial markets will be facing a still challenging time with the risk that some of the structural imbalances unwind in a disorderly manner.”
Robert E. Kiernan III, CEO of Advanced Portfolio Management, considers global macroeconomic and market conditions and concludes that, while risks abound and most assets are fully-priced to over-priced, there are multiple attractive and exploitable investment opportunities with short, medium, and long-term return horizons.
“While markets have misinterpreted and overreacted to a panoply of data since the beginning of the year – more often than not reading everything from the latest Chinese NPL numbers to crude inventory statistics as a harbinger of the next 2008 – well-conceived investment themes with sufficient conviction to hold through some of the markets more cathartic convulsions to have produced strong risk-adjusted returns. This is not to dismiss the real potential risks looming on the horizon, but rather to advocate investment themes that are conceived and constructed with greater sobriety and discipline.”
Ben Hunt, Chief Investment Strategist of Salient and author of Epsilon Theory, adds “Just as in the 1930s, we are moving from policy-driven markets to policy-controlled markets. Alternative investment strategies, properly conceived, can help navigate this transition.”
AIM Summit Awards – Recognizing Excellence in Fund Management and Service
For the first time since its inception, AIM Summit this year will recognize leading hedge funds with the AIM Summit Awards, judged by a panel of industry veterans representing sovereign wealth funds, funds of funds, asset managers and hedge fund consultants. “We are delighted to recognize industry leaders and innovators at our Sharpe Soirée gala” comments Luka Stimac, Managing Director of AIM Summit, “It is an honour to work with some of the world’s most sophisticated investors and brightest minds to identify the best of the best in hedge fund management.”
AIM Summit Partners:
The AIM Summit Dubai 2016 is organized in partnership with the Alternative Investment Management Association (AIMA), the global representative of the alternative investment industry. AIM Summit is made possible by generous support from the event sponsors, including Dalma Capital Management Limited, SHUAA Capital, Dubai International Financial Centre (DIFC), ADS Securities, Fundana Asset Management, PAAMCO, FXTM, ISAM, Factset, Eze Software Group, Fund Base, EY, Aventicum Capital Management, Societe Generale Corporate & Investment Banking, Apex Fund Services and FWU Dubai Services, McLaren, Franck Muller and Fundbase. Media partners for AIM Summit include The Hedge Fund Journal, CAIA Association, Preqin, Amwal, Fintrx, MENA Private Equity Association, Egyptian Private Equity Association (EPEA), Wall Street Oasis, Barclayhedge, Middle East Business Review, Global Banking & Finance Review, Hedge Fund Alert, Hedge Connection, The Wealth Journal and Eurekahedge. The travel partner for the AIM Summit is Emirates Airlines.