OFA conference: Hedge funds should focus more on TAMPs
Smaller hedge funds should devote more attention to Turnkey Asset Management Programs (TAMPs) if they want to raise meaningful capital going forward.
TAMPs enable independent financial advisors (IFAs) to outsource the management of some or all of their clients’ assets, namely research, portfolio construction, rebalancing, reconciliation, performance reporting, tax optimisation and reporting. This allows IFAs to focus purely on their clients’ personal finance needs.
“TAMPS are something smaller hedge funds should take note of. They are effectively registered investment advisers (RIAs) who take money from other RIAs and farm the money out to people like us. These TAMPs are making available to their clients access to large and small hedge funds and hedge funds sub-managing ’40 Act mutual funds,” said Chad Elson, chief operating officer (COO) at the New York-based South Street Capital Management, speaking at the Operations for Alternatives Conference in Palm Beach, Florida.
The TAMP market is sizeable and presents an enormous opportunity for capital-hungry hedge funds. Data from 2011 shows assets controlled by TAMPs stood at $250 billion, up from just $16 billion in 1996. The RIA market is also a key target for hedge funds launching retail products with an estimated 300,000 RIAs operating in the US alone.
However, Elson conceded TAMPs added yet another intermediary to the investment process. “Admittedly TAMPs add another layer of expenses and fees to the investment process but they have the ability to give access to hedge funds, both big and small, which their client RIAs might not have access to,” he added.