Martin Randall

LGT Crestone is introducing a tailored investment solution exclusively for its clients, providing access to a select group of idiosyncratic and traditionally hard-to-reach asset classes with low correlation to both traditional and private market investments.

The PG3 Longreach Alternative Strategies Fund (The Fund), is a custom-designed investment vehicle developed in partnership with PG3 AG, the family office of the three co-founders of Partners Group AG, and local alternatives specialist Longreach Alternatives Ltd, enabling investors to co-invest directly alongside the founders.

The Fund offers highly diversified multi-strategy and multi-manager exposure aligned to all three of PG3’s key investment areas: Insurance Finance, Royalty Finance, and Litigation Finance.

The Fund is designed to leverage the three principal strategies as unique risk and return drivers, serving as effective portfolio diversifiers with low correlation to existing traditional and alternative asset classes.

Martin Randall, Head of Private Markets, LGT Crestone, said: “We are delighted to offer our clients a very distinctive investment opportunity that strongly aligns to our commitment to pioneering institutional-calibre solutions for high-net-worth individuals and families.

“Diversification is fundamental to our investment philosophy. Alternative investments like private markets and unlisted real assets have certainly helped diversify portfolios in recent years, however, they often share similar market-related and/or economic sensitivities with traditional assets. Private equity is still equity after all, so when you strip out differences in valuation approaches, the underlying risk factors are the same and should be considered as such when building well diversified portfolios.

“What sets this opportunity apart is its ability to genuinely diversify portfolios through numerous idiosyncratic return streams that have been shown to be uncorrelated to both traditional and alternative assets. In this sense, it represents an ‘alternative’ to traditional alternatives,” said Randall.

Urs Wietlisbach, co-founder of Partners Group, also commented: “Partners Group has had a long-standing relationship with LGT Crestone, however this custom-built solution is the first time we have made these three combined strategies from our own family office, PG3, available in way that is a true reflection of the founders’ portfolio, taking the same unconstrained relative value approach across the three strategies. These three strategies have provided a consistent source of returns to our family office during significant market downturns, such as throughout COVID. Our approach ensures flexibility to effectively navigate evolving market conditions.”

Sam Edwards, Managing Director, Longreach Alternatives, reflected on the Fund’s natural alignment to LGT Crestone’s offerings: “Longreach’s longstanding relationship with LGT Crestone speaks to their position as a leader in private markets, making them an ideal partner for delivering such an innovative alternative investment solution. We’re confident that this collaboration will empower high-net-wealth investors with access to a truly unique investment opportunity.”

With nearly 20% of its $30 billion in assets allocated to alternatives, LGT Crestone has pioneered access to these types of investments in the Australian high-net-wealth space.

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Edwards, with almost two decades of experience in securities finance, and liquidity and financial resource management, will strengthen State Street’s collateral management team in Asia Pacific to better support its regional clients in devising a well-executed collateral strategy. Edwards will report globally to Staffan Ahlner, global head of Collateral Management, and regionally to Michele Hardeman, head of Global Markets, Asia Pacific. Sam will be based in Hong Kong.

“Collateral management is fundamental for institutions to manage capital, risk, liquidity and regulatory compliance” said Ahlner. “Market evolution has not only highlighted the importance of liquidity management but also its efficiency large buffers could represent a drag on portfolio balance. Whilst there are several opportunities in the market the evolving regulations are adding operational complexity and creating liquidity challenges for investors if collateral is not managed properly.”

State Street’s Uncleared Margin Rules (UMR) Readiness Survey^[1] revealed that more than 80 percent of institutions are unprepared to comply with all facets of the next phases of the UMR. Institutions in scope for these rules must have strong counterparty relationships plus a range of sophisticated operational and analytical capabilities to assess their exposure and ensure compliance. Some buy side clients have taken the UMR regulation as an opportunity to review their end to end and front to back strategy when it comes to collateral to ensure they maximize access to liquidity and transformation opportunities whilst solving for regulatory compliance.

“With State Street’s collateral management solution, Collateral+, clients will have a strong understanding of their regulatory obligations through our complementary assessment of their portfolios and prepare them to meet new requirements with confidence, minimizing their cost of collateral with our analytical tool and driving efficiency in their operating models with our end-to-end capabilities,” said Hardeman. “With this integrated, data-driven platform, combined with Sam’s local knowledge and expertise, we are well positioned to support our Asia Pacific clients in improving operational efficiency, achieving UMR compliance and managing risk and liquidity by streamlining their collateral program.”

Edwards joins State Street from Credit Suisse, where he established secured financing in APAC and established equity financing capabilities in EMEA during his 12-year tenure with the firm. His most recent role was head of Asia Pacific Central Collateral Desk. Prior to Credit Suisse, Edwards spent six years at Lehman Brothers’ on the Equity & Fixed Income Secured Financing Desk.

“The objective for our clients is not only to meet the immediate needs of margin segregation and management, but also to deliver greater ongoing returns in a challenging market place. To that end, we are partnering with them to enable enhanced inventory, liquidity and risk management to drive financial resource efficiency and overall returns. I look forward to engaging and working with our clients across APAC,” said Edwards.

State Street’s Collateral+ is an integrated platform with tri party, third party and margin management which empowers clients to tailor their collateral management service, solve UMR compliance issues and increase overall operational efficiency with real-time, aggregated data transparency and added straight-through processing to meet collateral demands. In addition, Collateral+ includes efficient pre-trade and collateral analytics enabling clients to decrease margin and funding costs, thus minimizing any associated portfolio drag.

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[1] State Street engaged Oxford Economics to field a global survey of 300 industry executives from 16 countries during June 2020.

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