Ohio based GLASfunds, backed by CI Financial, open to seeding emerging strategies
Emma Cary, 24 MAY 2022
Alternative investment platform GLASfunds is searching for non-correlated strategies including global macro, equity and credit funds.
The $1.4bn Ohio-based firm is also interested in multi-strategy, event-driven and relative value hedge funds.
Its search will focus on US and developed markets for event-driven, equity and credit, and globally for macro.
Managing director of investments Brett Hillard told With Intelligence that GLASfunds does not want any specific sectors within equity or credit.
“We have some elevated skepticism for strategies that are in sectors with material hedge fund crowding like tech, consumer etc,” he said.
GLASfunds’ assets break down into $1bn AuM and $360m in assets under contract (AuC). AuC refers to contractual commitments made by clients to a specific drawdown fund that have yet to be called.
Ticket sizes, which is a function of demand by advisors, currently range from $3m to $50m, although this is not fixed.
GLAS clients
Founded in 2009 by Michael Maroon, GLASfunds acts as an outsourced investment aggregator, seeking to offer institutional-quality due diligence and asset management oversight to intermediaries.
It serves RIAs and private banks across the US that manage between $500m to $60bn AuM. The company has recently signed deals with unnamed wealth managers in Tel Aviv and Canada.
GLAS mainly helps these firms access alts strategies for their UHNW clients. Wealth firms can invest in single strategies available on the platform, or mix underlying strategies to create a diversified portfolio of alternatives.
Wealth managers who use GLASfunds include Huntington Private Bank, Clearstead Advisors and another large Ohio-headquartered private bank.
CI Financial bought a minority stake in GLASfunds in November 2021, with an option to take majority control within the next four years.
Manager requirements
GLASfunds does not have a minimum AuM for managers and will work with emerging managers, operating private equity, credit or hedge funds.
“We have a wider threshold for smaller funds, although we don’t gravitate towards them,” Hillard said.
Maroon added that GLAS is willing to seed, given the right opportunities.
“We are not in the seeding business but, you know, we don’t have an aversion to it,” he added. “To find something truly industry-leading, you’re probably going to have to be early. Because if it’s truly great, it’ll become capacity constrained – so if you wait three to five years for it to build a track record, you’ll miss out.”
Although the platform works with smaller funds a bigger focus is established names.
Even when considering emerging managers, their track record is still important to the platform, so these opportunities are likely to be spinouts from larger firms.
Alongside a good track record, funds needed to show themselves as “institutional-grade managers,” meaning they need to have strong service providers and back-office operations, as well as minimal business risk.
“We need robust business controls and the sort of institutional plumbing now available to smaller firms,” Maroon said.
ESG is not a criterion used by the platform in manager selection, with restrictions only occurring in certain “questionable” industries.
“ESG is in the eye of the beholder – we’ll disclose if a fund invests in oil and gas, but we allow wealth managers to make their own decisions on behalf of their clients,” Hillard said.
Red flags for GLASfunds include dishonesty and a lack of transparency.
“We want ethical, reputable managers,” Hillard said. “I don’t care if they’re arrogant, but any whiff of bad behavior, they’re out.”
When a manager runs into difficulties, GLAS expects a full and frank assessment, instead of deflection.
“If they try gloss over it, I’m just going to move on,” Hillard said. “We’re always inundated with new ideas, so why should I spend my time on an idea with a bunch of hair on it?”
The investment team strongly believes attention to detail on transparency signals operational robustness at the GP, which it argues typically goes hand in hand with successful investment practices.
Fund selection
Hillard and Maroon explained that there were two separate processes for onboardingmanagers, depending on if they were referred by adviser firms or if they were GLAS sourced.
For GLASfunds-sourced managers, the platform conducts a standard due diligence process,using quantitative and qualitative measures.
It uses third-party databases, including Pitchbook and Venn by Two Sigma, to assessmanagers.
After completing a 15-to-20 page investment due diligence report, it retains a large USconsultant for its operational due diligence review. This involves an onsite visit.
After both forms of due diligence are completed, funds will be onboarded on to GLASfundsand be accessible to all its partner firms.
Hillard said the platform receives a lot of inbound inquiries from managers. While many chose to contact him via LinkedIn, he said the most effective way to contact the firm is via the contact form on GLASfunds’ website.
Disclosure
This report and the information contained herein is not intended to be, nor should it be construed as, an invitation, inducement, offer or solicitation to engage in any investment activity. This information is for discussion purposes only. Nothing contained in this report constitutes tax nor legal advice. Alternative Investing is complex and speculative; and thus, […]
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