Boston-based research and consulting firm Cambridge Associates is moving into portfolio management services for LPs in Asia, according to Alvin Tay, head of the firm’s Singapore office.
Cambridge will target Asia-based investors looking to initiate exposure to private equity or Asian LPs that have an Asia-based team and want to work with the firm to implement a global private equity strategy. Tay hopes to attract LP clients who wish to outsource their private equity investment capabilities to Cambridge for an undisclosed management fee, with the firm acting as the fund selection team to the investor.
However, offering asset management services as well as playing an advisory role means Cambridge will be competing in a crowded funds of funds industry, which has been consolidating. Layers of fees have been an issue for some LPs who are making a gradual move toward direct investment.
“The market is becoming less intermediated,” said a source at a fund of funds. “Sources of capital – LPs – like doing things themselves rather than going to a fund of funds group and paying another layer or fees.”
Tay believes Cambridge’s approach is different than other players because it is offering the service on a discretionary basis, where the investor can stop using the firm at any given time, without having to discontinue the relationship with any of the selected GPs
“We are not intending to create long lock-ups for our investors,” Tay added.
“In the case of funds of funds, they typically create co-mingled structures where they have multiple clients investing in a single fund of funds. We are creating customised private equity portfolios for our clients [and] there are no co-mingled vehicles.”