Tom Furrer

As announced at the Infonic Client Conference in London on May 11, 2010, Infonic is making an important change to its organization as a logical consequence of the recent growth of the company and in recognition of the opportunities ahead. Nolan Phillips, who joined Infonic as Chief Operating Officer in July 2009, will assume the running of the company as its Chief Executive Officer while Tom Furrer, the founder and majority shareholder, will focus on board responsibilities and strategic company development.

Nolan Phillips

This change will enable the company to better leverage its strategic business expansion and value creation opportunities. It also puts the person responsible for leading the company through its next growth phase, and with the most experience, the best skills and a proven track record in doing so, in place.

Both clients and staff greatly welcome this transition as the logical next step in taking the company forward, not only from a strategic but also a tactical/operational perspective.

From the inspiring HedgeSphere product vision presentation and exciting technology previews, to the television-worthy debate spectacular between industry luminaries Ian Morley and Roger Nightingale, which was staged as a heavyweight title bout complete with the boxing gloves, robes, handlers, and bow-tied umpire, to the lively discussion of the HedgeSphere User Group – all participants gave the two-day event a thumbs-up.

Clients are invited to review the presentations and previews on the Infonic User Website, and reminded to attend the next HedgeSphere Users Group meeting in September, 2010.

ZURICH, NEW YORK, LONDON - May 6th, 2010 - Infonic AG, The  leading provider of front, back and middle office software solutions to the funds of hedge funds (FoHF) industry and other institutional investors in hedge funds, today announced it has been awarded a United States Patent, No. 7,653,578 B2. This patent addresses a key issue in the portfolio accounting and tracking of investments into hedge funds: the challenge of handling uncertainty in accounting information due to time delay in the issuance of related information. The patent, issued Jan 26, 2010, was awarded based on Infonic’s unique use of streams of account flows. These provide additional depth and detail to the tracking of account information; beyond the traditional dimensions of value and date. By overlaying these flows, information may be tracked and navigated over the life cycle of the account including dynamic changes over time. As a result, a hedge fund pricing universe may be accurately built while simultaneously capturing complex business transactions, such as redemptions from hedge funds that may take 90 days or more from transaction decision to final cash settlement.

“After submitting our patent application back in 2004, we are delighted to be ultimately rewarded with its grant. We have always considered ourselves as leaders in this particular aspect of portfolio accounting unique to alternative investments. The industry investing in hedge funds runs on estimates, while accounting runs on facts. We bring these disconnected worlds together with our systematic approach, managing the timeliness versus accuracy conundrum. It is very gratifying to have the official endorsement of our work in this area that this US patent provides” said Tom Furrer, CEO of Infonic AG. “Asset Managers and Administrators need to be able to make frequent investment or cash management decisions. They can’t stop and wait for final numbers to come out. It doesn’t make sense from a business perspective either to stop pricing or transaction processing to wait on portfolio valuations. Investors and regulators want near-real-time information. However, time periods are inherently overlaid when running on estimated information. Our HedgeSphere product incorporates our patented methods at its core to deliver our clients with the most robust operations solution for the industry, allowing our clients to be on top of their Hedge Fund investments at any time with the best available, quality-assessed information.”

About Infonic AG

Headquartered in Switzerland, and with offices in Zug, Zurich and New York, Infonic AG is the leading provider of front, middle and back software solutions to the global fund of hedge fund industry. Its HedgeSphere product range debuted in 1999 and has been adopted by the largest and most innovative players in the industry. For more information about Infonic AG, visit www.infonic.net.

Media Contacts:

Bridget Piraino

Global Head of Marketing

Infonic AG

Phone: +1 347 414 9457

Email: marketing@infonic.net

LONDON - February 24th, 2010 - Infonic AG, hosted a kick-of meeting of its HedgeSphere User Group (HUG) in London, drawing together a high-powered group of client executives and super users to discuss HedgeSphere user priorities.

Users may access Summary Notes, Action Items and Photos of the event on the Infonic client web site.

Firm Highlights Key Areas Where Operational Improvement Will Help Grow Assets

ZURICH, NEW YORK, LONDON - January 21, 2010 - Infonic AG,  a leading provider of back and middle office software solutions to the funds of hedge funds (FoHF) industry, today announced its Top Challenges for FoHFs in 2010. The company highlighted restoring credibility, coping with tougher regulation, managing higher operating costs at a time when fees are down, improving due diligence and risk management, and fighting competition from exchange-traded funds (ETFs) and indices as key challenges FoHFs must address this year.

 ”After the market turmoil of the past two years - and the resulting mass destruction of wealth - FoHFs have never been more challenged to restore confidence in their investment models. Both investors and regulators are demanding greater transparency and liquidity, improved due diligence and risk management. At the same time, competition for investor dollars is fierce from ETFs and indices, which provide a real alternative to the fund of hedge fund investment model,” said Tom Furrer, CEO of Infonic AG. “To cope with increased competition, as well as handle all of these challenges efficiently and cost effectively, FoHFs are being pushed to institutionalize their systems and processes.”

Infonic’s Top FoHF Challenges for 2010 are:

1          Restoring FoHF Industry Credibility - FoHFs are suffering from a crisis in confidence, due in large part to the fact that they sold diversification and absolute returns, but delivered correlated losses in 2008 and not enough returns in 2009. Clients are questioning the FoHF model and considering a do-it-yourself approach instead. Trust has been shattered and needs to be carefully rebuilt.

2          Providing Clients with Greater Transparency and Liquidity - In the past, FoHFs offered liquidity that they didn’t have from their underlying hedge fund managers. They thought, wrongly, that redemptions would always be limited and that credit lines would meet any shortfalls. In fact many of the credit lines were withdrawn, liquidity was reduced or closed out by many managers, and clients redeemed in droves. To address liquidity issues, FoHFs need to alter their systems to gain full look-through into their liquidity positions, and provide the transparency and reporting that clients are demanding.

3          Coping with More Stringent Regulatory Rules - Global regulators, in a competitive rush to de-risk the market, are applying capital levies across a wider range of financial institutions, along with a potential tidal wave of new rules to accompany them. It is clear that more rules and controls are heading this way from the G20, EU, FSA, SEC,CFTC, OECD and all the other alphabet regulators. FoHFs will need to be prepared to deal with this, both operationally and from a cost perspective. Costs of meeting the new requirements will hit the profit and loss of all FoHFs, so firms must take action to automate and streamline the way they deal with new regulations.

4          Pressure on Fees - Given the crisis in confidence at FoHFs, these firms are facing downward pressure on fees. Clients will not pay for poor performance, so there are few performance fees in the pipeline. Management fees are under pressure as well. Two-and-20, the traditional fee approach, is dead or dying.
5          Achieving Better Due Diligence and Risk Management - Risk has moved from a four letter word to a theological concept. With Madoff, Weavering and other frauds and failures, it is clear that there was a gap between FoHF marketing presentations and the reality. This will need to be changed. Before, pitches had wrongly morphed into: alternatives deliver absolute returns - in all market conditions - and are un-correlated with traditional assets like stocks and bonds. To address due diligence and risk management, firms need to establish processes that dig deeper, identify problems sooner, and that actually work when it matters most.

6          Fighting Competition from ETFs and Indices - Why bother with FoHFs when you can create your own via ETFs, indices and managed accounts platforms? It’s cheaper and more transparent. To address this, FoHFs must increase the value delivered to clients. Some are even adding advisory businesses.

“Credibility takes years to build and can be lost in a day. The wave of regulation, client demands and competition that FoHFs face requires serious attention.  Too much is still done manually. To succeed in 2010, FoHFs must streamline and automate their asset management activities - including due diligence, portfolio management, compliance, accounting, risk management, valuation, position tracking and reporting - if they want to attract and maintain assets,” said Ian Morley, Infonic Board Director and Director of Wentworth Hall, a consulting and private equity company.

About Infonic AG

Headquartered in Switzerland, and with offices in Zug, Zurich and New York, Infonic AG is the leading provider of front, middle and back software solutions to the global fund of hedge fund industry. Its HedgeSphere product range debuted in 1999 and has been adopted by the largest and most innovative players in the industry. For more information about Infonic AG, visit www.infonic.net.

I love that old adage that paraphrases as, “the future is the hardest thing to predict.” Unless of course like me you are a life long Tottenham Hotspur fan (for non-UK readers, a football team that plays in the English Premier League) and are familiar with the annual triumph of hope over experience. If Spurs were a cyclical agricultural stock they would go up only to come down, and have not been an evergreen since the 1960s.

But as we all know, nothing in life is certain apart from death and taxes and therefore, following the credit crunch and mass destruction of wealth that followed, we are now entering  a period of re-evaluating our approach to risk and return from our investments.

Risk has moved from a four letter word to a theological concept, with global regulators in a competitive rush to de-risk the market by applying capital levies across a wider range of financial institutions and a potential tidal wave of new rules to accompany them. Meanwhile, a few smart investors worked out that all asset classes had been de-risked simply by a price collapse approaching nearly 100% in some cases, and close to 50% or more for some major stock indices.

The investment decision was binary and simplistic. Fill your boots almost indiscriminately and expect either a dramatic rebound (lots of history to support this theory) or the end of the world (see Noah for details - Genesis, Chapters 6-9). That is why so many indices that do not have emotions, risk teams and views simply went straight back up while most active managers, traditional and alternative, lagged behind while they all  de-risked, messed about with the models, raised cash, worried and discussed Armageddon.

Traditional Alternatives (what a great oxymoron that phrase has become) did reasonably well but came out of it quite badly. The reasons are both clear and yet somewhat contradictory. The hedge fund and fund of fund pitch had become distorted and misheard.

What hedge funds actually do is lose less in bear markets and make less in bull markets. The net result is better risk-adjusted and absolute returns over time. The pitches, however, had wrongly morphed into: alternatives (read hedge funds) deliver absolute returns in all market conditions and are un-correlated with traditional assets like stocks and bonds. As investors hear the news they want to hear the sellers adjust the story to fit, as they like earning money by selling good news.

Now another little twist of distortion has occurred. In the last few years, institutional investment in alternatives had grown from a trickle to a flood, some of it direct but much of it filtered via consultants. Most investors and consultants feel comfortable with names and companies they have known for a long time. Similarly, they are generally more comfortable with investment ideas that feel safe and familiar - albeit with a new “absolute” name tag attached.

The confetti-like use of this newspeak resulted in almost every good, mediocre and bad fund manager quickly working out that it makes more sense to be paid 2 and 20 for an absolute fund than 30 basis points or less for a long-only version. As a result there was a huge expansion of long-only managers suddenly becoming long/short managers. Let’s forget for the moment that some of them wouldn’t know a short if they fell over it. Now the promise is the new absolute-return long/short fund managed by Ura Loser and Ima Winner.

As a result, a lot of investors bought the absolute-return offerings from the names they knew from the long-only world without doing much due diligence. Worse, most long/short strategies are by nature about 70% long and therefore highly correlated to the very stocks that they hoped to diversify from. To compound the problem, these investors ignored, because of fear, lack of knowledge (ignorance) or sometimes just prejudice many of the hedge fund strategies such as CTAs and global macro that are true risk diversifiers. As a consequence, they ended up with alternative portfolios which were in many cases no more than an extension to their existing traditional long-only portfolios and diversified in name but not fact.

Here comes the contradictory irony. When all this fell apart, they complained very loudly that the alternative part of their portfolio had not protected them from the rule that all correlations go to one during bear markets. A true own goal!

While the current pick up in demand for hedge funds and fund of funds is more talk than action the desire to change to real alternative, alternatives is palpable. Following a number of client meetings and virtual cry’s from the heart at some invitation-only investment conferences, the irreconcilable (can we please have transparency, liquidity, managed accounts, segregated custody, insurance, better regulation and higher returns with guarantees if available,  and without structures, leverage, gates, lockups… the list goes on) needs to be addressed.

Coming back to where we started about the future being hard to predict: parts of it are clearly not. You don’t have to buy the science for green energy, just feel the sentiment and measure the public support. Theses investments for credibility purposes  need  good stories attached to them , but clearly all forms of new energy (idiots growing bio fuels on arable land being a notable exception) make us all feel good about ourselves and the chance of making money as well.

Sadly, it’s not as easy as that. You need to do your homework. What technologies will work?  Who has a leading edge? How quickly will the Chinese or Indians make a commoditized version? On a global scale, is solar better than wind or tidal or geothermal? What if Malthus was right that as the global population grows exponentially, food only grows linearly? And then what happens when a billion middle-class Asians in 2050 all want to eat McDonald’s? If you don’t know, then how do you know that the people selling you these solutions are any more than a page ahead of you in New Scientist? The truth is you probably don’t! So, as always with investments, do your due diligence properly before buying into the best new alternative storyteller. Otherwise you may be doomed to repeat at leisure the false hope you had from the supposed alternatives that you
bought last time round.

*Ian Morley is the founder of Wentworth Hall Consultancy in London. A prominent figure in the hedge fund industry, he has advised the Bank of England and was the first chairman of the Alternative Investment Management Association.

By Ian Morley*
Banks are about as popular as politicians and estate agents. Not liked, but considered too important to fail and too important to upset. In teenage parlance they get a lot of verbal but not much action.
In stark contrast, hedge funds are increasingly being accused as possibly the perpetrators and certainly the catalysts of the crime. And what was the crime? To let everyone know that the party was well and truly over. How was the crime committed? By shorting the banks and mortgage companies to deflate and thereby demonstrate that they were castles in the air. The answer seems to be shoot the messenger!
Can anyone recall a time when the ceo, cfo or chairman of a listed company ever announced its share price was unsustainable and recommended that investors sell? Yet it is the unlimited rise of prices, unchecked by such sober messages, that ultimately leads to the inevitable falls and far greater destruction of wealth than a few hedge funds shorting some stock.
But perfectly sensible people will tell you that the shorting of stocks in general and bank stocks in particular is probably unethical and ought to be illegal. This ignores all evidence to the contrary: that prices fell more after the short-selling ban was imposed and that hedge funds shorted at the top of the market not at the bottom. Hedge funds should have been praised for raising the alarm-not chastised for ringing the alarm bell of excess and greed.
The world of hedge funds is Darwinian. There are no bailouts for us. The good will prosper while the poor and mediocre fail.
Sensible dialogue leading to intelligent regulation seems to have been jettisoned by the latest EU daft (sorry, draft) directive that is seen as being inspired by prejudice and possibly breaches international agreements on free trade. It will add billions in burdensome costs just after the expensive and mostly useless MiFID implementation and credit meltdown, and could transfer regulation from the FSA direct to the EU, even though 80% of the entire European hedge fund business resides in London.
The new mantras of liquidity, transparency, managed accounts and tougher regulation will probably prove to be palliative rather than curative. Managed accounts cost more and, unless legally segregated, the danger of rehypothication-an arcane term for grabbing assets that don’t belong to you-will still apply unless they are very carefully and expensively constructed.
Liquidity is fine, but not if you want to have exposure to small-caps, emerging markets, distressed, and so on. Transparency will allow more quantitative risk to be measured but that is not the point. The risk was obvious before; it’s what you do about it that matters. And as we know, most investors remained in denial until they ran out of money. They then sold their good assets to meet the margin call on their bad assets.
So, as anthropology teaches us, those who survive are better equipped for the future and, as the study of subsidies teaches us, those subsidised tend to remain weak and unlikely to change their bad ways. Guess which one is the banks and which the hedge funds?
The fact that we should all be a bit more humble and transparent is a given. The old days of “give us your money and we will manage it” have been replaced by a genuine rather than superficial environment of listening and learning. Offering investment solutions rather than just selling investment products is the way the good alternative providers will go because they must to survive. The banks have no need to change and therefore won’t. Why should they when we are collectively subsidising them out of bankruptcy?

*Ian Morley is the founder of Wentworth Hall Consultancy in London. A prominent figure in the hedge fund industry, he has advised the Bank of England and was the first chairman of the Alternative Investment Management Association.

ZURICH, NEW YORK, LONDON - December 7, 2009 - Infonic AG, Infonic AG, the leading provider of front-, middle- and back-office software solutions to the funds of hedge fund (FoHF) industry, today announced that the company has added Mr. Ian Morley to its Board of Directors. Mr. Morley, a UK-based alternative investment management industry veteran joins new Chair of the Board and US-based Managing Partner of Azimuth Partners LLC, Virginia Gambale; and non-company executive Director, Alexander Aebi, the Swiss-based CEO of Abiba Consulting AG. The board is completed by Infonic company executive Directors Tom Furrer, CEO, and Roman Bargezi, Head of Engineering

I’m delighted to welcome Ian Morley to our Board and to have Virginia Gambale take its Chair. Virginia is an exceptionally well experienced Director of fast growing companies and I look forward to making great strides under her leadership. Ian Morley brings a wealth of experience across the global asset management industry, and Infonic is privileged to be benefiting from his insight and expertise,” said Tom Furrer, CEO of Infonic AG. “As founding Chairman of the Alternative Investment Management Association (AIMA) and advisor to central banks and regulatory authorities, Ian is a true industry leader who understands the business, regulatory, and operational issues that the hedge fund industry faces. We look forward to leveraging the combined talents of this amazing team to become the global operational backbone of the hedge fund industry.”

Mr. Morley has had an extensive career in financial services, and the alternative asset management industry in particular. He holds chairmanships and directorships at several firms, including Corazon Capital, Allenbridge Hedge, and Wentworth Hall, a consulting and private equity company. During his career, Mr. Morley served as CEO of DDO, a fund of hedge fund, and as Head of Derivatives and Quantitative Fund Management at AIB Govett. Earlier, he was Managing Director of Rudolf Wolff Fund Management and European Director of Managed Futures at Lehman Brothers.

Ms. Gambale is Managing Partner of Azimuth Partners LLC, an investment and advisory firm she founded in 2003. She has served on over 20 public and private boards as well as several Advisory Boards in the finance and technology industry. Today, she holds public company board seats on Jet Blue and Piper Jaffray. Prior to 2003, she held senior management positions, including CIO, at global corporations including: Merrill Lynch, Marsh & McLennan, Bankers Trust Alex Brown and Deutsche Bank. Additionally, she headed DB Strategic Ventures, was General Partner in ABS Ventures, and was subsequently a partner at DB Capital Partners.

About Infonic AG
Headquartered in Switzerland, and with offices in Zug, Zurich and New York, Infonic AG is the leading provider of front, middle and back software solutions to the global fund of hedge fund industry. Its HedgeSphere product range debuted in 1999 and has been adopted by the largest and most innovative players in the industry. For more information about Infonic AG, visit www.infonic.net.

Ian joins Chairman of the Board, Virgina Gambale, and Alexander Aebi, along with Infonic executive management Directors Tom Furrer and Roman Bargezi on the Board. Ian is also Chairman of Corazon Capital Limited, an Asset Management Company; Chairman of Allenbridge Hedge, a hedge fund rating and consulting company; and Director of Wentworth Hall, a consulting and Private Equity company.

He was formerly CEO of DDO, a hedge fund of funds; Head of Derivatives and Quantitative Fund Management at AIB Govett; Managing Director of Rudolf Wolff Fund Management; and European Director of Managed Futures at Lehman Brothers. Ian was the founding Chairman of The Alternative Investment Management Association (AIMA). He has advised the Bank of England, the Central Bank of Ireland, the OECD, the EU, the FSA and other international institutions about the Hedge Fund industry.

Ian graduated with a BSc Economics (Hons) from the LSE. He appears regularly on television, radio and conferences throughout the world and his articles are frequently published in leading financial journals.

Everyone talks about partnership and achieving a ‘win: win’ situation, when working with other organizations to deliver it services or projects. Very few really achieve such an objective. Whether working in the private or public sector, with suppliers or in collaboration with others; the reality is working with partners is often the norm rather than the exception.

Working together, Man and Infonic have demonstrated a true partnership in the successful deployment of Man’s Multi-Manager Operating Platform, which is built on Infonic’s HedgeSphere software.