Warburg Invest, the German asset management company of Hamburg-based private bank MM Warburg & Co, and Swiss banking group Syz & Co have agreed to jointly develop, manage and distribute alternative products in Germany.
The objective of the two banking groups is to launch one or more German-based funds of hedge funds, as well as to offer alternative management services to institutions looking for tailor-made portfolios.
The planned funds of hedge funds will be aimed at both a private and institutional investor base. Private investors will be offered a low minimum investment and will be approached jointly by both parties and through third-party distribution networks. Product details will be released closer to launch date in a few months time.
3A SA, the alternative division of the Syz & Co Group, will provide its recognised expertise and proven track record in hedge fund manager selection and in managing funds of hedge funds.
MM Warburg & Co, acting through its asset management Warburg Invest which will assume the role of fund manager, will contribute with its unparalleled knowledge of the German market, acquired through two centuries of banking activity.
Max Warburg, Partner of MM Warburg & Co, said: "We are both independent private banks, actively managed by their principal shareholders and we share the same vision of the asset management industry. I believe that we ideally complement each other."
"This move is part of a general trend in Europe towards giving private and institutional investors a broader access to hedge funds. Besides Switzerland, we are already present with alternative products in the UK and in Italy, and we are now arriving in Germany," commented Eric Syz, founding partner of Banque Syz & Co SA.
In the UK, Syz & Co offers its alternative investment expertise through ALTIN AG, a closed-end alternative investment company listed on the London Stock Exchange. Syz & Co is present in Italy through Albertini Syz Investimenti Alternativi SGR, which already manages four different alternative investment vehicles.
Restricted until recently, with the exception of a few more liberal jurisdictions such as Switzerland, to high net worth individuals, hedge funds in Europe have benefited from the burst of the stock market bubble in 2000. An increasing number of investors are showing a growing interest for absolute return investments and appreciating the benefits that hedge funds provide in terms of de-correlation. European regulators, which until recently had adopted a very restrictive approach towards alternative products, have begun to adopt a more accommodating position. Italy, France and more recently Germany now allow funds of hedge funds for public distribution, although regulatory approaches differ widely.
In Italy, the authorities have reduced the minimum investment from EUR I million to EUR 500,000, a move that effectively limits access for the general public, but lowers the barrier to HNW investors. In France, all funds within a fund of hedge funds must be listed on a stock exchange, a constraint that some observers say restricts the investment universe.
In Germany, the focus has been placed on fiscal aspects, as all hedge funds included in a portfolio must comply with German tax requirements and are therefore obliged to provide an unusually high degree of transparency on the sources of losses and gains.
Background Note: Based in Geneva, the Swiss banking group Syz & Co is exclusively dedicated to asset management through three interconnected business lines: High-level private banking; a comprehensive range of investment funds (Oyster Funds); and, expertise in the field of alternative investments with 3A SA.
The group manages USD 6.6 billion in assets, and has 180 employees. Syz & Co is present in Switzerland with offices in Geneva, Zurich, Lugano and Locarno and also operates abroad in London, Luxembourg, Nassau, Salzburg and Milan.
3A SA - Alternative Asset Advisors is the alternative division of the Syz & Co Group. 3A is the Investment Manager of ALTIN AG and manages approximately USD 1.2 billion in alternative investments.
Founded in 1798, MM Warburg & Co is the second largest independent private bank in Germany. MM Warburg's main activities are private banking, asset management and investment banking for a wide range of clients comprising high-net worth individuals, institutional investors and small to medium-sized companies. Besides its headquarters in Hamburg, the group is also present in Bremen, Koln, Frankfurt, Hannover, Berlin, Luxembourg and Zurich.
Warburg Invest is the Frankfurt-based portfolio management arm of the MM Warburg Group. Its products are funds and discretionary portfolios for institutional investors as well as mutual funds. Its key competence lies in equity management, with more than two thirds of the fund assets invested in stocks.