Gottex Fund Management : 2014.04.24 - GFMH - Q1 2014 Trading Update.pdf

Gottex Fund Management Holdings Limited (Gottex), a leading independent global alternative asset management group, announces its trading statement for the quarter ended 31 March
2014.
Highlights:
 Combined client assets1 of USD 8.6 billion as at 31 March 2014, compared to USD 8.1 billion at 31 December 2013, with combined fee earning assets up 14% during the quarter when excluding platform assets, primarily as a result of client subscriptions, particularly in advisory mandates.
 Received shareholder approval for the Gottex EIM transaction at Gottex's Annual General Meeting (AGM) held on 16 April 2014, as well as FCA approval; completion now subject to approval by FINMA, the Swiss regulatory authority.

 Our bond substitute market neutral product line posted positive performance of 1.8% YTD, net of all fees, outperforming its benchmark by 0.8%; our alternative credit strategy returned 3.4% during Q1 and 8.8% on a 12 month rolling base; while our equity product returned 3.5% during the first quarter.

 HS Group our Hong-Kong based Asian hedge fund seeding joint venture, announces its first investment into a new hedge fund, Pleiad Investment Advisors, set up by the former China and Japan specialists at Soros Fund Management.

Commenting, Joachim Gottschalk, Chairman and CEO, stated:

"Volatile equity markets and a surprisingly strong bond performance characterised the investment markets for the first quarter. Our hedge-fund and alternative investments performed very well and we continue to anticipate increased allocation from institutional and retail investors into the alternative investment sector. In that light, we are pleased to see an increase in our asset base during the first quarter, predominantly through advisory mandates won in the APAC region.

"We are happy to report that the substantial majority of our shareholders at the AGM held on April 16th approved the issuance of 14 million new shares in the company for the completion of the transaction with EIM. We anticipate the deal to close by the end of May, subject to approval by FINMA, the Swiss financial regulator."

Gottex Fund Management Holdings Citigate Dewe Rogerson
Andre Keijsers Michael Berkeley/Caroline Merrell
Tel: +44 20 7494 5148 Tel: +44 20 7638 9571

1) Includes assets from the merger of EIM Group, which is subject to regulatory approval and completion.

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The combined client assets of Gottex and EIM as at 31 March 2014 were USD 8.6 billion (subject to regulatory approval and completion), up 7% when compared with combined assets of USD 8.1 billion at 31 December 2013. This total consisted of USD 8.1 billion in assets under management (AuM) and managed account platform assets of USD 0.5 billion.
Excluding managed account platform assets, AuM of USD 8.12 billion was up 14% when compared to USD 7.11 billion at 31 December 2013, which was primarily the result of client subscriptions in advisory mandates, which are low fee paying. Combined assets saw net inflows of USD 630 million, while FX and technical factors impacted assets by approximately USD 120 million and net performance added USD 30 million.

Gottex Assetsi Combinedi

Dec 2013 (USD billion)

Combinedi Mar 2014 (USD billion)

% change

Global Multi-Manager BUii) 6.09 6.95 +14% Asian Multi-Manager BUiii) 0.35 0.53 +52% Multi-Asset BU 0.66 0.64 -3% Total GFM assets 7.11 8.12 +14%

LUMA/LUMX assets 0.97 0.50 -48%

i) Subject to regulatory and shareholder approval and completion.

ii) Of which advisory mandates represented USD 2.45 billion as at Mar 2014 and USD 1.27 billion as at Dec 2013. iii) Of which advisory mandates represented USD 0.19 billion as at Mar 2014 and nil as at Dec 2013.

iv) Client assets represented in both GFM and LUMA GSS amounted to USD 80 million.

Note: percentage changes are actual, the amounts are rounded.

Gottex's core market neutral products have continued to generate positive performance in the first quarter outperforming their benchmark the HFR Conservative Index by 0.8% during the period1. Both products continued to accrue performance fees during Q1. Our alternative credit strategy added 3.4% for the quarter and 8.8% on a twelve month rolling base. Our Asia market independent strategy was flat for the quarter outperforming its index by 1.7% and our US equity portable alpha strategy was up 3.7% for the quarter, both continuing their positive momentum. Our Gottex Frontier multi-asset absolute return products posted positive performance in the first quarter of this year with +0.8%.
As announced last week the resolutions tabled at the AGM on 16 April were all approved by a substantial majority and we expect completion of the transaction with EIM Group by the end of May, subject to regulatory approval by the Swiss regulator. Integration planning is progressing well and we now expect synergies to exceed the USD 12 million announced previously. We are excited about the opportunities EIM's risk services LumRisk will offer the clients of our combined firm.
In Asia, HS Group, our Hong Kong-based Asian hedge fund seeding joint venture, announced its first allocation into Pleiad Investment Advisors, a new Asian focused long-short equity venture managed by Kenneth Lee and Michael Yoshino, both previously with Soros Fund Management. We plan to update our shareholders and clients of our strategic plans in more detail during the month of May.

1) Benchmark is the HFRI FoF Conservative Index. This index is unmanaged and uninvestable and the figures do not reflect any deductions for fees, expenses or taxes. Gottex has not selected or eliminated any index based on performance.

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Our outlook has improved since our last update. Return of inflows to the hedge fund industry in general increased during the first quarter and we expect the trend to continue for the year. The efforts of the Chinese government to open its capital markets and allow domestic investors to increase cross border transactions will lead to a larger flow of capital to the asset management industry, which should bode well for our Asian expansion strategy, which increased fee earning assets during Q1 by 52%. With regard to our multi-asset products, we continue to believe that the exceptionally strong performance that traditional 60/40 balanced portfolios have experienced over the last 5 years is unlikely to continue, which should shift investor interest into liquid multi-asset products with absolute return alternative components and low correlation characteristics to fixed income duration.
Gottex will release its Q2 2014 trading update on 22 July 2014 and announce its 2014 interim results on 12 September 2014. To view the presentation accompanying this release, please visit www.gottexholdings.com/Presentations.aspx.

Incorporated in Guernsey, Gottex is the holding company of a leading independent global alternative investment management group, whose core business is providing predominantly alternative multi-manager and multi-asset solutions and related advisory and risk management services. In this capacity, the Gottex group provides multi-asset endowment- style investment products, multi-manager hedge fund solutions (including market-independent comingled portfolios) and sector-specific single investor vehicles, as well as a selection of Asian-focused funds to a global and diversified institutional and retail clientele.
With offices in Guernsey, Lausanne, London, Hong Kong, New York, Boston, Luxembourg, and Zurich and affiliates in Shanghai, Melbourne, Tokyo and Auckland, the Gottex group is present on four continents with over 40 dedicated investment professionals on the ground. As at 31 March 2014, Gottex and EIM had USD 8.6 billion of total client assets.

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