Emerging asset managers from the West Coast are trying to break the traditional mold and are offering unique strategies which they hope provide appeal to a more discerning investor and investment appetite, stated Keith Sharkey, Director and Co-founder of Kaufman Rossin Fund Services an independent full service provider of specialized administration services to the global financial community with $18bn in AuM.

Speaking at the recent Opalesque West Coast Roundtable sponsored by his own firm, Sharkey said the West Coast is seeing a new breed of startup managers establishing businesses locally with a lower capital base and hopes of “attracting the spectrum of investors based upon their track records and pedigrees.”

He added, “These emerging managers are not new to asset management but many are new to running a business and that requires us to provide significant guidance regarding the operational nuts and bolts. In the past, the majority of West Coast managers were in the long/short equity category and had standalone Limited Partnership structures.”

A positive characteristic of these new managers is that they realize that they have to put into place an institutional quality infrastructure in order to raise assets beyond the “friends and family” investor category. To achieve this goal, emerging asset managers must invest a concrete commitment, create feasible business plan, and offer flexible fee structures.

Sharkey advised, “The process of engaging their service providers on a fixed budget is often challenging but making the right selections for these key business partners who can offer scale and flexibility as the fund grows is crucial to the success of the business.”

Explaining the mix of strategies in the West Coast, Sharkey pointed out that the local “traditional mold” of funds invest in commodity pools, distressed assets, emerging markets and continued growth in private equity.

More notably, previous perception of emerging markets is confined to Latin America, Russia, China, or India. However, emerging managers are now looking at Southeast Asia, the former Eastern Block countries, Africa, and the Middle Eastas part of their focus in emerging markets expansion.

The real estate space is also getting a lot of attention from West Coast managers although it is not as big compared toFlorida. However, investors are now focusing real estate opportunities in the Middle East and Asia, especially now that real estate taxes in the U.S. are on the rise.

“The West Coast has a lot to offer to potential investors with the continued growth and diversity of managers and a wealth of highly trained professionals and service providers,” Sharkey added.

Aside from offering highly trained professionals, the West Coast offers a unique advantage compared to “capitals of capital,” like London, New York or Chicago, according to Jason Gerlach, Principal and Director of Strategic Planning for Sunrise Capital Partners of San Diego, CA., a systematic macro trading fund with $750m AuM.

Because the West Coast is “our own island philosophy and technique and bears no relationship to the ‘ schools’ of systematic macro trading,” local fund managers are shielded from the many market noises and “trading groupthink” which they have been trying to ignore and avoid in the first place, Gerlach said.

Gerlach reasoned that, “Instead, our strategy is its own and trades much differently than those of our peers in the systematic macro space. This we believe has served us and our investors very well and will continue to do so as AUM continues to concentrate around a few global capital centers.”

Although he added there is also a disadvantage in terms of travel for West Coast managers to connect with capital sources which can sometimes add pressure.

He also suggested for fund managers on the West Coast to join organizations like the California Hedge Fund Association or CHFA which works “to bring people together and create awareness of the great alternative investment opportunities here in California amongst those back East in the U.S., in Europe, and even beyond.”

The Opalesque West Coast Roundtable was sponsored by Kaufman Rossin Fund Services. The full OpalesqueWest Coast Roundtable can be accessed here.