It has been a watershed year for Gemini Alternative Funds, LLC (Gemini Alt), as it continues to see interest among large allocators – pensions, endowments – that look at the managed account platform, and specifically Gemini’s Dedicated Managed Account (DMA) solution.
The DMA infrastructure is supported by Gemini Alt’s parent company, NorthStar Financial Services Group, LLC (NorthStar), which has more than USD685 billion in AUM. As well as the DMA platform, Gemini Alt operates the Galaxy Plus platform – a CFTC and NFA regulated platform – that provides a lower investment option to non-pension fund investors, and also the Galaxy Hedge platform, which gives investors access to a variety of hedge fund strategies to complement its CTA-focused platform.
“We are currently onboarding two household names onto our DMA platform and Galaxy Plus platform. Private banks have become more prominent with respect to their interest in using platforms like ours (to service their HNW clients),” explains David Young (pictured), President of Gemini Alt.
When Galaxy Plus was established in December 2014 it was designed to onboard CTAs to meet investor demand at the time. Things have evolved since, as asset allocators seek to use managed accounts for a wider range of hedge fund strategies.
“This year we’ve extended the Galaxy platform to onboard more hedged equity managers,” says Eddie Lund, SVP Business Development, NorthStar. “For 2018 we are already starting to vet some illiquid, PE-type strategies to reside on Galaxy. The idea is as we continue to grow we want to support investors in their investment choices. We are seeing those choices migrate towards hedged equity as well as private equity strategies.
“If the market pulls back, which people expect to happen at some point, managed futures could come back to the fore. Everything is cyclical. Money will probably flow back to CTAs and this might then prompt us to add more of those managers to Galaxy.”
With both the commingled Galaxy platform and the DMA platform, Gemini Alt is able to offer the investor marketplace both standard and customised exposure to hedge funds. Both platforms are able to provide operational efficiencies.
“Over the last 12 months, we’ve seen demand from investors for smaller, less established managers where they can have better third-party oversight and control of the operational elements; not because there’s an issue with the manager, the investor just wants greater operational comfort by using a platform,” adds Young.
The DMA business is approximately USD1.1 billion, confirms Young, adding that he is currently onboarding a number of mandates and expects AUM to double in the first six months of 2018 and triple by the end of 2018.
Gemini Alt’s team provides independent due diligence on the underlying advisors on an ongoing basis. “We monitor for any negative news and perform guideline monitoring on a daily basis to check what is going on in the portfolio. We make sure that the strategy remains in line with the investor’s expectations,” says Young.
Another element of good governance is standardisation of information; the ability to invest across a large number of advisors and pull all that information to one single location.
As Young concludes: “Having a focal point to pull everything together and provide a uniform view of the portfolio brings significant benefit to the investor and ensures that all the underlying managers are adhering to the investment guidelines.”
