06/01/2011

LGT Capital Setting Sights on US Investors

U.S. hedge fund investors will soon get their first crack at LGT Capital, a large fund-of-funds manager well regarded in Europe.

LGT already is familiar to private equity investors in the U.S., thanks to multi-manager vehicles with a combined $16 billion of private equity holdings, but the firm hasnít before marketed its hedge fund offerings in the States. Why now? Mainly because U.S. investors accounted for the lionís share of global inflows into funds of hedge funds last year.

The Swiss firm currently manages about $5 billion in a dozen multi-manager hedge fund vehicles for investors in Europe and Asia. LGTís hedge fund management team, led by Roberto Paganoni, is now laying the legal groundwork to begin raising capital in the U.S. starting in the first quarter of 2012. The planned marketing push is being timed to coincide with the implementation of new regulations requiring most U.S. hedge fund managers to register with the SEC.

Itís unclear what vehicles LGT plans to offer in the States. Itís possible the firm will launch multi-manager funds specifically tailored to U.S. investors, but it also may provide access to some of its existing vehicles. That would include LGTís flagship Crown Managed Futures fund, which has $1.3 billion under management and has delivered a 9.4% average annual return since its inception in 2000.

U.S. investors also could get a shot at Crown Select Opportunities, which was up 6.6% this year through April, following an 11% gain last year. The fund, which had $82 million under management as of April 30, posted a 6.1% gain in 2008 ó when hedge funds globally lost 19% on average. Another possibility is LGT Corporate Activity, which was up 5.1% during the first four months of this year, on top of a 12.1% gain last year and 28.9% return in 2009.

Among fund-of-funds managers in Europe, LGT is held in high esteem ó partly because it never suspended redemptions during the financial crisis. As a result, its hedge fund business dropped from a peak of $6.7 billion of assets under management to $4.2 billion at the end of 2008.

Perhaps more importantly, LGT was one of the few Swiss funds of funds that didnít have exposure to Bernard Madoffís Ponzi scheme. The firm briefly invested with Madoff in 1999, but pulled out in 2001 because it didnít receive certain information it had requested from Madoffís firm. The fraud, the largest in history, came to light in December 2008.

LGT started out as the alternative-investment arm of the family office for Princely House of Liechtenstein, the royal family of that small but prosperous European nation. The firm began accepting outside capital in 1996 and morphed into an independent alternative-investment manager in 2000. The royal family continues to be a major investor.

The firm, with a staff of more than 180 working in six offices around the world, manages money for some 250 investors in 30 countries.

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