Damien Hatfield of Mantis Funds: “Managers have to commit to the long haul”
Ahead of the Sydney Hedge Funds Club evening on 9th September, Hedge Funds Club’s Stefan Nilsson talked with Damien Hatfield, Founder of Mantis Funds, one of the event sponsors.
You have had a long career in asset management. How did you end up setting up your own shop together with Timothy Cheung, David Gray and Mark Paton in 2020?
Yes, it’s nearly a lifetime in alternative assets, broking, managing and fund setups. Since 2007, I have been a third-party marketer. I mainly represented US or European alternative or credit managers into the Australian market. Sometimes, I had very successful years where I would get significant allocations from superfunds or institutions. Then I would get years where there was nothing, zip. I would always be self-examining. I worked out that the third-party marketing model is somewhat flawed. Tim, David and myself, at the beginning of Covid, had an opportunity to buy a $100 million incubator with three managers. It collapsed over the first lockdown weekend. We ended up rescuing one of the managers who the incubator had closed. We ran the back office, service providers and did the marketing. Out of that was born a fund management platform where we build local feeders, licensing, back office, service provider appointments and capital introduction as Mantis Funds. Not stand-alone third-party marketing. This is a much better model.
The Mantis Funds’ team has a wealth of prior experience from fund management, prime brokerage, investment banking, private wealth and so on. How important is it for your success to have that wider pedigree rather than “just” fund distribution experience?
That’s a great question. We discussed my background being marketing, but David Gray runs an incredibly tight ship of back office, compliance and service provider management. David was head of prime brokerage for UBS and RBS for Southeast Asia. Tim has had incredible experience as a fund manager and in PE. He is our CEO and brings firm-wide management to the table. He’s not a bad part-time marketer as well.
What do you actually do for the fund managers you partner with?
If somebody inquires about our services, I always say that we are a fund management platform. We provide licensing, compliance services and fund structure, either a local independent unit trust or an offshore feeder. We run the back office for the fund manager. Manage the service providers and we market the funds. We have 14 fund partners ranging from alternatives to PE to long-only equity daily liquidity unit trusts.
What investment strategies do you currently see demand for from Australian allocators?
A very pertinent question. As a team, our experience base was alternative assets and we held the firm out to be a specialist in that area. Most of our early fund partners were liquid and illiquid alts managers. I found it really difficult over recent years to get any traction for alternative asset managers. We did develop certain channels and clients who supported our products, but there wasn’t significant flow. Recently, we did two daily liquidity equity fund manager launches. The response was quite incredible compared with the legwork that we put into alt managers. I guess what I learnt is that you build your business on a diversified mix of traditional and alternative managers.
How does Mantis Funds source funds to bring to Australia?
Haha, another good question. Old contacts and LinkedIn! A while ago, I did a selfie from our new office just saying “Guess where our new office is located”? I got 20,000 impressions and many guesses as to where we were located. That post alone unearthed a new partner manager. I’d also say that Tim and I network with a lot of old contacts and that has also produced new partners.
How important a role do investment consultants play when it comes to fund selection?
Investment consultants are extremely important in the Australian market. After the Banking Royal Commission, wealth managers were required to have external investment committee consultants advising their groups. This is a significant target market for us.
How do you see the Australian alternative investment industry evolving in the coming years?
This is a hard one. Considering my earlier comments, you really need to find true believer investors to commit to alternatives. I always say to managers who want to access the local market, they have to commit to the long haul. Setting up appropriate fund structures, sending out the performance newsletters and hopefully good performance. All of this is cyclical. Alternatives fall out of favour and then fall back into favour. It will come back, if it hasn’t already started.
How do you unwind when you’re not working?
Haha! You and I both love our rock. We both loved Ozzy and Black Sabbath. I’m a big Rolling Stones fan and saw them in your home town Stockholm a few years ago. Outside of that, my wife and I have nine grandkids between us. We both ocean and pool swim and surf. We live at the beach and not many days go by that we don’t have a dip, all year round. We are currently skiing in the Australian snowies.
