New Beginnings
21 Feb 2018
After launching the Canadian Association of Alternative Strategies and Assets, James Burron discusses his ambitions for the association
Image: Shutterstock
After launching the Canadian Association of Alternative Strategies and Assets (CAASA) at the beginning of this year, has the association had a good reception in its first few weeks?
We’ve already had 104 companies that are interested in what we’re doing. There’s 24 now that have committed to join as soon as we are incorporated and have an application ready—so we’ll start running with a couple of dozen.
Prospective members are interested in getting involved in our board positions and establishing committees, such as a digital asset committee, as well as advocacy, operations, and educational research. I’m setting it up with my former Alternative Investment Management Association (AIMA) colleague, Caroline Chow, we’ve worked together for about five years and very excited to begin, especially with the reception we’ve had thus far.
What was the reason behind setting up the new association? What was the initial aim?
To have a Canadian association that has what we call a pan-alternative to cover the hedge fund and alternatives strategies, but also other areas like private equity, private lending, and real estate—the ones that are traditionally invested in by institutions.
Many fund managers are launching cryptocurrency or crypto-asset funds and, as a consequence, the securities commissions are getting up to speed in these new areas. Finding smart regulation is a priority for them, and they have created a so-called sandbox and launchpad to gather and organise information on these areas and creating the rules essential to investor protection and industry growth.
On the hedge fund side, CAASA does something similar where the regulators would ask how a new, proposed rule would affect the industry. They can do what they like obviously, but it’s great to have input from the industry rather than just going ahead and seeing what happens.
Why does Canada need a specific association focused on its market, as opposed to being covered by AIMA or similar associations?
There are a few issues that are Canada-centric. The retail side, the proposed liquid alternatives regulation is similar to UCITS and what’s currently going on in Australia. Also, some distinct differences that, I believe, make it quite compelling for the managers, investors, and regulators.
From an association perspective, having Canada as part of a larger one could have these interests lost in the shuffle. About two-thirds of hedge fund assets under management are in the US (California’s gross domestic product is larger than that of Canada) and having a local organisation to represent these constituents.
Are you looking to partner with AIMA or other established associations?
Yes, we’ve partnered a lot with the Chartered Alternative Investment Analyst Association (CAIA), Chartered Financial Analyst societies across Canada, Professional Risk Managers’ International Association (PRMIA), as well as emerging managers board in Québec.
CAASA has been described as a rival and also as complementary to what AIMA Canada and other organisations deliver, and I would opt for the latter. There are many areas where AIMA has a great deal of experience and others where CAASA will naturally emerge as a leader. Areas such as the Alternative Funds Proposal that will bring alternatives to mutual funds, support and training for emerging managers, newer areas such as robo-advising and digital assets, and defining the risks of investing in alternative strategies are areas where CAASA has an advantage, and I have been active in these areas over the last seven years.
Will you be forming a board? If so, who do you have in mind and what industries would you like represented?
We like it to be as diverse as possible. We will have representation from across Canada from all sorts of managers, investors, and service providers not only on our board but on our various member groups.
What do you hope to achieve with this new association that you couldn’t at AIMA?
We want to drive CAASA to different niches. It’s carte blanche in our more specific mandates, services, and events, built upon the common association structure that everyone knows. Areas such as digital assets and robo-advisory services are very Canadian, and we have members joining from those areas, so establishing a committee to derive value for the members and industry is a natural fit. In addition, to alternative strategies, private lending, private real estate, and areas such as sales and distribution and operations and diligence. We may have as many as 20 committees shortly catering to the requirements and preferences of our growing membership, with as many as four to five employees from one company on them depending on their availability and interest. One example that is not as obvious is fund administrators are very interested in cryptocurrencies—not just the blockchain for underlying trade processing, but also custody of digital assets (currencies and smart contracts) themselves.
What goals have you set for 2018 and where would you like the association to be by the end of the year?
For the budget side, it looks like we need one hundred members, we should get them as soon as we can. I think once we get 50 there’s no stopping us; we are at 27 at the moment.
So far membership is a mix of those who see us as a complement to (numerous) other association memberships, others are new to associations (and their benefits) and interested in becoming active, and still, others have not been a part of associations but have now seen our offering as relevant to them.
We need to start getting the committees formed regarding the national presence. Eventually, we want to do events in London, Australia, Geneva, Zurich, Dubai, South Africa, possibly looking forward to 2019—we have many members that like that idea, but the first step is Canada.
What are the biggest challenges the asset servicing industry will face in 2018?
The biggest challenges going forward will be similar to those over the last few years. You have a persistent bull market in equities and rates that are low and haven’t started to pop up and cost investors. Long only bonds funds haven’t lost money so many investors see them as safe when they have a huge embedded risk. It’s in crisis environments that we start to see how alternatives perform, so we are still waiting for that.
In the 1990s, people piled into mutual funds and soon, I believe, that will occur with liquid alternatives, although there is a spectrum of opinions on what will occur, I’ve seen this movie before and, thankfully, it ends well. The biggest challenge for the industry, and for CAASA, will be growth and to manage the particular areas of activity and to keep this fast-moving train on the rails.
We’ve already had 104 companies that are interested in what we’re doing. There’s 24 now that have committed to join as soon as we are incorporated and have an application ready—so we’ll start running with a couple of dozen.
Prospective members are interested in getting involved in our board positions and establishing committees, such as a digital asset committee, as well as advocacy, operations, and educational research. I’m setting it up with my former Alternative Investment Management Association (AIMA) colleague, Caroline Chow, we’ve worked together for about five years and very excited to begin, especially with the reception we’ve had thus far.
What was the reason behind setting up the new association? What was the initial aim?
To have a Canadian association that has what we call a pan-alternative to cover the hedge fund and alternatives strategies, but also other areas like private equity, private lending, and real estate—the ones that are traditionally invested in by institutions.
Many fund managers are launching cryptocurrency or crypto-asset funds and, as a consequence, the securities commissions are getting up to speed in these new areas. Finding smart regulation is a priority for them, and they have created a so-called sandbox and launchpad to gather and organise information on these areas and creating the rules essential to investor protection and industry growth.
On the hedge fund side, CAASA does something similar where the regulators would ask how a new, proposed rule would affect the industry. They can do what they like obviously, but it’s great to have input from the industry rather than just going ahead and seeing what happens.
Why does Canada need a specific association focused on its market, as opposed to being covered by AIMA or similar associations?
There are a few issues that are Canada-centric. The retail side, the proposed liquid alternatives regulation is similar to UCITS and what’s currently going on in Australia. Also, some distinct differences that, I believe, make it quite compelling for the managers, investors, and regulators.
From an association perspective, having Canada as part of a larger one could have these interests lost in the shuffle. About two-thirds of hedge fund assets under management are in the US (California’s gross domestic product is larger than that of Canada) and having a local organisation to represent these constituents.
Are you looking to partner with AIMA or other established associations?
Yes, we’ve partnered a lot with the Chartered Alternative Investment Analyst Association (CAIA), Chartered Financial Analyst societies across Canada, Professional Risk Managers’ International Association (PRMIA), as well as emerging managers board in Québec.
CAASA has been described as a rival and also as complementary to what AIMA Canada and other organisations deliver, and I would opt for the latter. There are many areas where AIMA has a great deal of experience and others where CAASA will naturally emerge as a leader. Areas such as the Alternative Funds Proposal that will bring alternatives to mutual funds, support and training for emerging managers, newer areas such as robo-advising and digital assets, and defining the risks of investing in alternative strategies are areas where CAASA has an advantage, and I have been active in these areas over the last seven years.
Will you be forming a board? If so, who do you have in mind and what industries would you like represented?
We like it to be as diverse as possible. We will have representation from across Canada from all sorts of managers, investors, and service providers not only on our board but on our various member groups.
What do you hope to achieve with this new association that you couldn’t at AIMA?
We want to drive CAASA to different niches. It’s carte blanche in our more specific mandates, services, and events, built upon the common association structure that everyone knows. Areas such as digital assets and robo-advisory services are very Canadian, and we have members joining from those areas, so establishing a committee to derive value for the members and industry is a natural fit. In addition, to alternative strategies, private lending, private real estate, and areas such as sales and distribution and operations and diligence. We may have as many as 20 committees shortly catering to the requirements and preferences of our growing membership, with as many as four to five employees from one company on them depending on their availability and interest. One example that is not as obvious is fund administrators are very interested in cryptocurrencies—not just the blockchain for underlying trade processing, but also custody of digital assets (currencies and smart contracts) themselves.
What goals have you set for 2018 and where would you like the association to be by the end of the year?
For the budget side, it looks like we need one hundred members, we should get them as soon as we can. I think once we get 50 there’s no stopping us; we are at 27 at the moment.
So far membership is a mix of those who see us as a complement to (numerous) other association memberships, others are new to associations (and their benefits) and interested in becoming active, and still, others have not been a part of associations but have now seen our offering as relevant to them.
We need to start getting the committees formed regarding the national presence. Eventually, we want to do events in London, Australia, Geneva, Zurich, Dubai, South Africa, possibly looking forward to 2019—we have many members that like that idea, but the first step is Canada.
What are the biggest challenges the asset servicing industry will face in 2018?
The biggest challenges going forward will be similar to those over the last few years. You have a persistent bull market in equities and rates that are low and haven’t started to pop up and cost investors. Long only bonds funds haven’t lost money so many investors see them as safe when they have a huge embedded risk. It’s in crisis environments that we start to see how alternatives perform, so we are still waiting for that.
In the 1990s, people piled into mutual funds and soon, I believe, that will occur with liquid alternatives, although there is a spectrum of opinions on what will occur, I’ve seen this movie before and, thankfully, it ends well. The biggest challenge for the industry, and for CAASA, will be growth and to manage the particular areas of activity and to keep this fast-moving train on the rails.
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