March 2020 SBAI Working Groups About SBAI • The Standards Board for Alternative Investments (SBAI) is the neutral standard-setting body for the global alternative investment industry. • It provides a platform for investment managers, institutional investors and regulatory authorities to share areas of common concern and develop practical, industry-wide solutions through standard setting and industry guidance. – The Standards Board acts as custodian of the Alternative Investment Standards, which provide a framework of transparency, integrity and good governance to simplify the investment process for managers and investors. – The SBAI’s Toolbox provides industry guidance on a wide range of practical issues • The SBAI’s Standards and Guidance facilitate investor due diligence, provide a benchmark for manager practice and complement public policy. • The SBAI Working Groups, consisting of industry practitioners, play a central role in developing content and advise the board in its standard setting activities 2 SBAI Working Groups and Initiatives SBAI working groups cover a wide range of relevant industry topics to provide guidance to investors and managers on practical issues • Conflicts of interest • Update Standardised Board Agenda NEW: Alternative NEW: • Valuation • Governance case studies Credit Governance • Choice of fund structure • Manager committees • Back-testing practices NEW: • Develop a framework to help • Responsible investors and managers calibrate Factor Investing Broker dealer practices Investment their approach to RI in alternative Working Group investment strategies • Guidance on valuation of ILS Funds • Standardising subscription, KYC and NEW: Standard Insurance Linked (just published) AML processes for investors via a Investor Profile Funds • standard data structure Next steps: Side pocketing practices (SIP) Template • Comparing Chinese standards and • Roundtable series China Working practice to international practice Initiative: Culture • Focus on critical business and strategic Group & Diversity issues • C-level working group (to be launched) • Comparing Japanese standards and NEW: Japan practice to international practice Working Group 3 Alternative Credit Working Group Areas of focus Working Group Members • Conflicts of interest • Aalto University Foundation • Mirabaud Asset Management – Overview conflicts of interest in asset • MKP Capital management management • Aberdeen Standard Investments • Aktia Asset Management • Monarch Alternative Capital – How the Standards / regulation address • Albourne • Myriad Asset Management these issues • Angelo Gordon • New Holland Capital – Specific conflicts of interest in alternative • Bayerische Versorgungskammer • NZ Superfund credit funds • BIMCOR • Orchard Global Asset Management – Key questions for investors to ask • BlackRock • PAAMCO Prisma • Valuation • Bluebay Asset Management • PAG • Cairn Capital – Key features of a robust valuation • Pictet Asset Management framework • CN Pension • PIMCO • Cheyne Capital – Key issues arising in alternative credit: • PSERS • CPPIB valuation approach (accrued cost vs. “mark- • PSP Investments • Dymon Asia to market”) • Strategic Value Partners • Finisterre Capital – What do accounting Standards say? • Taconic Capital Advisors • Employees retirement System of – Key questions for investors to ask Texas • Teacher Retirement System of Texas • Choice of Fund Structure • GIC • Union Bancaire Privée – Fund structure as a function of asset • HPS Investment Partners • Utah Retirement Systems liquidity, investor preferences • J P Getty Foundation • University of Toronto Asset • Innocap – Tools to mitigate conflicts of interest Management (UTAM) • Ionic Capital Management • Transparency • Varma Mutual Pension Insurance – (to come) • Leadenhall Capital Partners Company • Magnetar Capital • Veritas Mutual Pension Insurance Company 4 Factor Investing Working Group Areas of focus: Working Group Members • Back-testing practices • Aalto University Foundation – Develop framework to assess back- • Aberdeen Standard Investments • Albourne testing results (detecting overfitting • ARP Americas bias, assessing assumptions, • Aspect Capital • Capital Fund Management framework to assess back-testing • CdR results over time) • Fiera Capital • Innocap • Broker dealer practices • Magnetar Capital • Man Group – Framework to assess broker dealer • Martlet Asset Management products (cost, governance, index • Noviscient design, …) • Old Mutual Global Investors • Teacher Retirement System of Texas (TRS) • Transtrend • Unigestion • University of Southern California (USC) • Victoria Fund Management Company • Wadhwhani Asset Management • Welton Investment Partners • West Virginia Investment Management Board 5 Insurance Linked Funds Working Group Areas of focus: Working Group Members • Valuations of Insurance Linked Strategy • Aberdeen Standard Investments Funds: • Albourne • AlphaCat Managers – Overview key issues / challenges • APG Asset Management – Spectrum of industry practices • ARP Americas • Asset Management One Alternative – Key questions for investors to ask Investments, Ltd • Bayerische Versorgungskammer see recently published Valuations Memo: • CPPIB • Elementum Advisors https://www.sbai.org/toolbox/ils-funds/ • Future Fund • Side pocketing practices: • Hiscox Reinsurance Linked Strategies • HSCM – Tools to address conflicts of interest • K2 Franklin Templeton • Leadenhall Capital Partners between different investors • Nephila Advisors – Features of a robust side-pocketing • Ontario Teachers’ Pension Plan (OTPP) • OPTrust process • PGGM – Key questions for investors to ask • PIMCO • PSP Investments • Teacher Retirement System of Texas (TRS) • Varma Mutual Pension Insurance Company 6 Governance Working Group Areas of focus: Working Group Members • Update the Standardised Board • Aktia Asset Management • New Holland Capital Agenda (template for fund Directors • Albourne • Nordkinn Asset Management to run board meetings) • APG Asset Management • Northpeak • Avanda Investment • Office of the New York City • Governance case studies: Management Comptroller – Conflicts of interest in parallel • Bayerische • Orchard Global Asset Management Versorgungskammer • Ontario Teachers Pension Plan funds • Bluebay Asset Management (OTPP) – Co-investments – how to ensure • CERN Pension Plan • Periscope Capital fair treatment of investors? • CQS • Pictet Asset Management • Elo Mutual Pension Insurance• PIMCO – Fund Director Conflicts of Company • PSP Investments interest • Finisterre Capital • Royak Mail Pension Plan • Manager committees • HealthCo Group • Taconic Capital • Ionic Capital Management • Unigestion – What functions in organisations • Lansdowne Partners • Varma Mutual Pension Insurance need to be covered by (which) • Martlet Asset Management Company • VER (The State Pension Fund of committees? Finland) 7 Responsible Investment Working Group Areas of focus: Working Group Members • Aalto University Foundation • Innocap • Review existing materials about • Aberdeen Investment Standards • Ionic Capital Management Responsible Investing in alternative • Aktia Asset Management • La Francaise • Albourne • New Holland Capital investments • APG Asset management • NorthPeak • Asset Management One • Office of the New York City • Review of regulatory developments Alternative Investments, Ltd Comptroller • Avanda Investment Management • OPTrust • Assessing applicability of different • Blackstone Alternative Asset • Orchard Global Asset Management Management strategies – key questions to ask • Brummer & Partners • Pictet Asset Management • Cairn Capital • PSP Investments – L/S Equity • CDAM • Rock Creek Group • CDPQ • Sandbar Asset Management – Fixed Income • CERN Pension Fund • Schroder Secquaero • CFM • Systematica Investments – Credit • CQS • Taconic Capital Advisors LP • Dymon Asia • Teacher Retirement System of – ILS • Elo Mutual Pension Insurance Texas (TRS) Company • Transtrend – Systematic/quant • Employees Retirement System of • Trium Capital Texas (ERS) • Unigestion • Key questions investors need to ask • Ferd • University of Toronto Asset • Fiera Capital Management (UTAM) when calibrating their approach • Finisterre Capital • VER (The State Pension Fund of • HPS Investment Partners Finland) • Infrahedge • Whitebox Advisors • Inherent Group • Winton Capital 8 Standard Investor Profile Working Group Areas of focus: Working Group Members • Objective: Streamline the • Albourne subscription, redemption and anti- • Avanda Investment Management • CDPQ money laundering processes by • CFM creating a Standard Investor Profile • Elo Mutual Pension Insurance Template for hedge funds and private Company • Commonwealth of Pennsylvania Public market funds that captures the School Employees’ Retirement System essential elements necessary in the (PSERS) most common jurisdictions. • HPS Investment Partners • Ionic Capital Management • Man Group • Renaissance Technologies • RockCreek 9 Culture & Diversity Working Group Areas of focus: • Corporate culture: – Link between corporate culture and compliance (culture) – How to assess corporate culture in due diligence? – … • Diversity – Role of diversity in organisations (preventing group think) – Implications for recruiting, firm management, approach to minorities – … Current approach: Global roundtable series 10 China Working Group (Est’ 2018) Objectives: • GAAP Analysis in Consultation with Chinese Regulators (AMAC & CSRC) • Comparison Between Chinese Regulation and Standards with International Practice • Follow-on sub-legal China