Noviscient has been featured on Bloomberg with an article on new Asian fund startups that are eschewing the 2/20 fee model. We believe that moving to a 0% management fee structure and providing downside offers better alignment for investors by creating incentives to focus on performance and exercising sound risk management practices.
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We are in one of the most interesting times in investment management. There will be more opportunities to build great businesses than ever before, but they will be different from the past. At Noviscient we are working very hard to re-imagine how investment management can and should work. We are in the process of building one of these great businesses.
From our point of view, the current business model for active management and hedge funds is not working. Fees are high, performance is poor and alignment is low. This is an opportunity but it needs a new approach.
New Business Model
We have boldly and deliberately created a business model and structure to address the shortfalls of the current active manager model. Our business model is centred around our modern, open-source technology platform and an innovative approach to working with great alpha generating partners. The product is a dynamic portfolio of systematic trading strategies.
- 0% Management Fee – we are not rewarded for sitting on money or gathering AUM
- 5% First Loss – a very direct signal about our belief in managing downside risk
- 10% Target Returns – performance fee is 20% on first 10% returns, 50% thereafter
The outcome is that we are fully focused on performance and aligned with our investors on both the upside and the downside.
An Institutional Investor article from a few weeks ago talked about the investment management industry being driven by technology from twenty years ago (1996 called. It wants its tech back).
As a young company, we have no legacy infrastructure or constraints. We can take full advantage of the massive growth in data, computing capabilities and modern machine learning technologies.
If you are interested in understanding more about our business model, or if you have been working on some great systematic trading strategies, contact us at firstname.lastname@example.org. We are keen to talk with people looking towards the future.