Alternative investments and the search for alpha generation strategies is a truly global pursuit with indicated market value in excess of USD 1trillion, and Latin America is no exception.
In addition to a universe estimated at more than 200 onshore and offshore funds, there is a fast-growing offering of funds of hedge funds constructed around both Latin America-centric and global market strategies.
In line with global trends, many sophisticated and high net worth Latin American investors are allocating more of their investment portfolios to alternative strategies. Both local and global investment managers have taken the initiative to add Latin American hedge fund offerings to their mainstream strategies.
There are two primary routes for investment:, a segregated managed account or direct investment into a hedge fund or fund of hedge funds. The fund of hedge funds option is gaining popularity as it allows investors access to a larger number of hedge funds, which might not be possible with a segregated account due to minimum fund subscription levels. Many Latin America investment managers are catering to both options for onshore and offshore investors alike.
This trend has created an exciting new opportunity for the global custody and fund administration industry servicing the Latin American marketplace. Whether for a segregated multi-currency custody account or a fund with full net asset value, financial accounting and transfer agency needs, an integrated service solution is key. The custodian and administrator must be viewed as a strategic service partner and extension of the investment management service delivered to the end-client. The longterm success of the custodian and administrator is contingent upon their ability to understand and embrace the needs of the client base, whether the investment manager, fund sponsor or investor. It is about listening to clients and understanding their needs, rather than trying to guess what they want or shoehorning them into a pre-existing template. Nor can one discount the importance of a physical presence and on the ground personnel who speak the local language and understand cultural nuances. While technology is a vital component of any servicing arrangement, custody and fund administration remain a relationship business. A dedicated relationship manager is vital to ensure a one-face relationship on behalf of the administrator, custodian or bank. By sing a single provider, and banker, investment managers and fund sponsors can ensure that the service and reporting they receive is accurate and meets their individual requirements.
The RBC Financial Group has been serving the Latin American market for over 100 years. RBC Global Private Banking's Corporate and Institutional division is seeing sustained demand from Latin American managers for integrated segregated client custody, banking, credit, fund custody and administration capabilities.
These involve domestic and global traditional long-only (equities, fixed income and money market) and alternative securities, spanning structures domiciled in the Caribbean, Europe and the Channel Islands. Latin America is truly a dynamic and evolving market place. In such a fast developing alternative investments sector, investment managers and fund sponsors need a strategic, innovative and responsive partner to meet the changing needs of their demanding front line investor base.