Analysing The Demand For Boutique

Funds In Germany: Market Growth And

Selection Criteria

FundForum International, Monaco, 26-6-2013

New Portfolios In Search For Fund

Boutiques

MH Services

Agenda: “Germany-Panel” in Monaco

• Participant

• Possible topics "panel discussion“

• Current Situation “ Germany”

• Target groups: Investors in Germany

• Selection - Selectors - Selecting Approaches

• Market entries – Opportunities and Pitfalls

• Fund Boutiques: Additional Panel in Monaco

• Notes to Monaco conversation impressions – “Market Entry to Germany”

• Administration - Support for market entry

• Market Research - Survey theory versus direct investor relations

• Customer contact – organizations, "gatekeeper“

• Typical errors / pitfalls on market entry into Germany

• Articles: Market Entry “Germany”

• Markus Hill

• Contact Information MH Services

2

MH Services

Participants in the panel of discussion

• Moderator: Mark Hill (MH SERVICES)

• Dr. Thorsten Querg (FOCAM AG

• Günter Jäger (PLEXUS INVESTMENTS)

• Daniel Haas (MEYER & CIE)

• Dr. Ferdinand Verweyen (NORTH GERMAN NATIONAL BANK LUXEMBOURG SA)

• Christian Michel (FERI EURO RATING SERVICES AG)

3

MH Services

Possible topics "panel discussion"

• Current Situation "Germany"

• Target groups - investors in Germany (Switzerland, Austria)

• Selection - selectors - Selecting approaches

• Market entry - Opportunities and Pitfalls

• Outlook

• Appendix - Additional Information "German market"

4

MH Services

Current Situation “ Germany”

• Establishment - graduating process?

• Definition of "fund boutiques"

• Acceptance to all selectors?

• Large to small companies?

• Market segment - for increasingly interested party?

• Regulation - trends, inclined to (UCITS, AIFM, etc.)

• Sales / Marketing

• Discussion of "investors" versus "discussion Provider"

• Common fund of boutiques, asset managers and family offices

5

MH Services

Target groups: Investors in Germany

• Asset Managers - support and selection

• Family Offices

• Fund of funds manager - support and selection, volume, fund size

• Private banks - support and selection, competitive ratio versus "Pearl Approach"

• Foundations - Foundation funds, asset-management’s approaches, direct investments

• Provision works

• Insurance - investment rules, asset classes

• Consultants - expenses, compensation, risk

• Corporates

• Churches (Investment committee)

6

MH Services

Selection – Selectors - Selecting

Approaches • Risks of fund boutiques selector?

• Opportunities for fund boutiques selector?

• Risk tolerance - how strong can investor support?

• Where conflicts of interest may exist? (earnings, preferred partners, etc.)

• Active allocation approaches versus passive approaches?

• What exactly does "active management“ mean in the decision for boutique?

• Ask for transparency, Boutique versus Big Animals?

7

MH Services

Market entries – Opportunities and Pitfalls

• Sales representatives? Placement agent? Own sales force? Consultants?

• Which investment vehicle is appropriate?

• Hit-and-run approach versus a solid long-term foreign asset managers to think?

• Administrator who can support? Corporate culture?

• National vision versus Pan-European / Global Approach?

• Why many foreigners fail in Germany?

• Peculiarity of the German market: fragmentation ("Investors clusters")

• What did the successful boutiques make it right?

• What does foreign fund boutiques in Germany contribute to be appreciated by German Funds selector ?

• Differences: private, semi-Institutional, Institutional

• Tax

• Platform, Master KAG, White Label Service KAG

8

MH Services

Outlook

• Market division?

• Networks and investors

• International Cooperation

• Regulation

• Who offers the best performance for entry to Germany? (Administration and sales)

• Universal Investment? State Street? Northern Trust?

• Capacity building among investors directly? Shift from the intermediary to the investor?

9

MH Services

Fund Boutiques: Additional Panel in Monaco

FundForum International, Monaco, 26-6-2013 Boutiques: Selectors Choice A Showcase Of Boutique Funds Moderated By Jose Luis Jiminez, CEO, MARCH GESTION DE FONDOS & Chairman of GBAM (Group of Boutique Asset Managers) With Boutique Fund Selector Feedback: Markus Hill (MH Services, Germany) & Dr. Thorsten Querg, FOCAM AG Günter Jäger, PLEXUS INVESTMENTS Daniel Haas, MEYER & CIE Boutiques: Tim Guinness, Global Energy Fund, GUINNESS ASSET MANAGEMENT Azhar Hussain, Head Of Global High Yield, ROYAL LONDON ASSET MANAGEMENT Mike Pinggera, Multi Strategy Fund, FOUR CAPITAL Jan Petersson, TELLUS FONDER Open Q & A: The Role Of Boutiques in „The Investment Solution Portfolio“

10

MH Services

Notes to Monaco conversation impressions

– “Market Entry to Germany”

11

MH Services

Market entry “Germany” (I)

Points that one can select from comments and questions of international market participants:

• Administration – is there an optimal 360-degree asset management company or is there optimal Custodian for market entry in Germany / Europe?

• Market research – it makes more sense to obtain directly feedback from investors in German-speaking on product offers rather than buying costly surveys?

• Which organizations in Germany / Europe have contacts / databases to respond quickly to investors?

• Why do many asset managers fail in Market entry?

12

MH Services

Market entry “Germany” (II)

1. Administration - Support for market entry • Investment companies in Germany and Luxembourg are contact points • International custodians are also the contact point Administration means : Manage your fund with me but see for yourself how you can collect assets! Administration means : Manage your fund with me and I will support you in entering the market! What help can investment companies from Germany and Luxembourg offer (Universal Investment, Hauck & Aufhäuser IPConcept etc.)? What help can "classic" custodians offer (Northern Trust, State Street, etc.)? What makes an ideal partnership between administrator and asset manager? Special field of support: Marketing, Sales, Public Relations Core Question: How administrators provide an added value if administration fees are comparable?

13

MH Services

Market entry “Germany” (III)

2. Market Research - Survey theory versus direct investor relations

• Market research institutes

• Consultants

Market research can be stated as: I will sell you some data’s and see how you can proceed or utilize it.

Market research can be stated as: I know the relevant data, will prepare for you in order to come in concrete dialogue with the potential investor (database, contact, feedback, “sales start")?

Does it make sense to speak to German or English market research institutes?

Does it make sense to speak to German consultants or placement agents?

Special field of support can be: figures, data, data bank, product feedback for market entry

14

MH Services

Market entry “Germany” (IV)

3. Customer contact – organizations, "gatekeeper"

• Sales

• Placement agents

• Consultants

• PR-/Marketing-Agents

• Event Organizers

Customer contact can be defined: adjust or buy – employ someone? Or use one for intermediary or long term business development?

Customer contact can be defined: use an introducer, see if there's potential and proceed internal or external to the topic distribution system Germany?

Customer contact can be defined: network, PR-/Marketing-/Sales support locally, organize yourself, instruct external or in combination with investment fund company?

Special field of support: Introduction, roadshow organization, events

15

MH Services

Market entry “Germany” (V)

4. Typical errors / pitfalls on market entry into Germany

• Opportunism

• Short term thinking

• Big visions without budgeting

• "We always fly to London and then to Germany, Switzerland, Austria"

Failure in launching can be: We will attend few events, speak to few random contacts and attempt it one more time.

Stumbling block: We hire a sales representative on site, to operate somehow on a performance-base, without any obligation on both sides, to enforce sales!

Another reason for failure - quite popular: We have an average product, if possible not disclose to German investors before market entry but expect tickets directly in a month!

Special Services: There are variety of support options in the German speaking countries, a good consultants saying, if an entry should not be attempted – one can prevent unnecessary use of time and budget.

16

MH Services

Articles: Market Entry “Germany”

“As a fund industry location and with its interesting investors, Germany is attractive to foreigners!” From June 24, 2013 until June 27, 2013, the industry-wide, well-known conference FundForum International takes place in Monaco. The independent industry expert Markus Hill will lead a panel of discussion of German speaking fund selectors on the topic of fund boutiques. The editor in chief Frank Schnattinger from IPE Institutional Investment has discussed with him the current situation of German fund industry. PanelDiscussionFundForumInternational2013 Private Label Funds, Luxembourg, and Market Entry in Germany

“What the farmer doesn’t know, he doesn’t eat” (German proverb). This old German proverb could also apply to certain investment companies or fund advisors outside of Europe. Often, due to language skills, familiarity with existing structures, or the “foreignness” of particular fund launch designs, foreign asset managers seem to consider interesting decision-making processes when they contemplate market entry in Germany. Information is indispensable: fund structure, regulation, but most of all the distribution opportunities in the German-speaking world are hot topics among the community of international sales professionals and are frequently discussed. How can German investment companies become attractive sparring and business partners at this point? How can a local, on-site partner offer added value in this situation?

PrivateLabelFundsMarketEntryGermany2013

More articles (fund boutiques, market entry, Germany): PublicationsMarkusHill

17

MH Services

Markus Hill

Markus Hill (MSc in Economics) is an independent asset management consultant based in

Frankfurt, Germany Professional experience includes SEB Bank and Credit Suisse Asset

Management. In addition, he worked as head of sales and PR for a German fund boutique.

Since 2005 he specialized in the management of mandates, sales, marketing, and PR

(consulting, "introducing"). Markus is also involved in selecting themes in the specialist

areas of target funds with a multi-management aspect, fund boutiques and mutual funds for

institutional investors (product scouting, fund selection). Furthermore he is actively engaged

in cooperation with the market-leading Private Label Funds/Master KAG in Germany

(Universal-Investment) promoting the idea of independent asset management and was the

Co-Initiator of the first all-German Consultant survey in 2005 and the first "UCITS-survey" in

2003. Market entry into Germany, behavior of fund selectors and fund providers in German

asset management industry are often discussed by him, e.g. in his asset-management-

publication MH-Focus. Through many articles, columns and presentations (national and

international) he has become a highly recognized expert in the German asset management

industry. "Industry multiplier" is a term often used by journalists and clients to describe his

style and personality.

(Markus Hill/ MH Services assigned in the role of Media Partner for: UCITS

Alternatives Conference in Zürich, September 2011)

18

MH Services

Contact Information

MH Services

19

Markus Hill

CEO

T: +49 (0) 69 280 714

M: +49 163 4616179

Email: info@markus-hill.com

Website: www.markus-hill.com

Mary Daute

Assistant Manager

T: +49 (0) 69 280 714

M: +49 176 6336 094

Email: mary.daute@markus-

hill.com

Website: www.markus-hill.com

Beatrix Biesemann

Project Assistant

T: +49 (0) 69 280 714

Email: beatrix.biesemann@markus-hill.com

Website: www.markus-hill.com