Fund distributor Polaris sees opportunities for single GP infrastructure, alternative risk premia and equity market neutral in Europe

Claus, you started Polaris in 2008 to support asset managers in promising alternative investment strategies in their market entry, fundraising and client-focused after-sales activities particularly to institutional investors in Europe or specifically in the D-A-CH region (Germany Austria Switzerland).

We are now in the middle of 2018, what trends can you observe at the moment?

Claus Hilpold, CFA, CAIA: We have seen strong inflows over the last two years into private market strategies in particular private infrastructure and private debt. We expect this trend to continue in 2018 and beyond.

We notice an increasing number of institutional investors approving specific allocation quotas for those asset classes within their strategic asset allocation and consequently preparing their front-, middle- and back-office to deal with the administrative and regulatory complexity that goes along with investments in this space.

We at Polaris have positioned ourselves with exciting niche offerings mainly focused on the middle-market where we see the best risk-/reward profile, both in the US and in Europe. In infrastructure, we have just successfully held the final close for a fund that focused on brownfield public-private partnership in Continental Europe.

We are currently screening the market for an interesting Single GP infrastructure offering, which we could offer as a successor solution to our institutional investor base in Europe. We encourage all infrastructure GPs that have started fundraising or planned to do so over the coming months, and who would be interested in marketing support in Europe or specific regions of Europe, to get in contact with us. We would be happy to take a serious look at such offerings and see whether we can identify a match with our investor's investment profiles.

What trends do you see in the liquid alternatives space?

Claus Hilpold, CFA, CAIA: Let me tell you what we see from our side. So, in the liquid alternative space, we are currently engaged with three distinct offerings. Firstly, a manager with a longstanding and excellent track-record in insurance-linked securities. Secondly, a credit opportunity manager focused primarily on the German-speaking SME or so-called "Mittelstandsmarkt". Our third offering is a long/short equity manager focused on small-and mid-caps in the D-A-CH region by executing a fundamental-driven bottom-up approach.

Our firm has more than 500 investor meetings per year across Europe - those meetings give us comprehensive insights into the investment plans of our institutional investor base, and how they want to position in the current and future market environment. Two areas in the liquid alternatives space where we notice increasing demand are Alternative Risk Premia (ARP) and Equity Market Neutral strategies.

In both areas, we have now started to keep our eyes open for promising investment solutions with a proven team, track-record, and USP. We speak with consultants, make use of databases build on our network, make use of investor referrals and involve our senior advisory board members with the aim to onboard such a manager within the coming months.

Again, we encourage all asset managers that are active in those strategies, and who would be interested in marketing support in Europe or specific regions of Europe, to get in contact with us. We would be happy to take a serious look at such offerings and see whether we can identify a match with our investor's investment profile in that area.

What are your criteria to take on asset managers and introduce them to investors in Europe?

Claus Hilpold, CFA, CAIA: Our investor base predominantly made up of institutional investors like pension funds, insurance groups, their relevant consultants and family offices. As such we have to adapt to their requirements when it comes to the quality, stability, and set-up of the operational infrastructure including certain regulatory aspects. Which also means that the asset manager needs to have a certain minimum size regarding team members, firm- and fund AuMs. In this process, firm size is not the only aspect we look at given that these parameters always need to be understood in the context of each strategy and set-up as a whole.

For a successful market entry in Europe and to be able to establish a brand within that investor landscape it is necessary to present the strategy to many institutional investors in one-on-one meetings. Therefore, we organize roadshows for and with the investment manager, during which we expect a member of senior management, who is knowledgeable about the investment process to join us. To that end, we also look for committed managers who do not shy away from traveling across Europe with our dedicated staff.

Disclosure: Opalesque founder Matthias Knab is Board Member and Advisor to Polaris.