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Crypto Hedge Fund Managers are being vetted by UBS Asset Management

In November 2021, the hedge fund specialist had $43.8 billion in gross assets under management, according to the most recent data available.

For investors, crypto schemes create a new set of due-diligence issues.

According to two persons familiar with the situation, the asset management arm of UBS, one of the world’s largest hedge fund investors, is performing due diligence on crypto portfolio managers as the division explores into digital assets.

According to the people, the vetting process for UBS Asset Management, through its hedge fund-of-funds business Hedge Fund Solutions, has been continuing for some time and has accelerated in recent months as institutional interest in the sector has grown.

To discuss sensitive commercial dealings, sources were given anonymity. A spokesman for UBS declined to comment.

UBS’ efforts have quickened as the number of crypto-focused hedge fund launches has increased recently, as has the number of traditional asset managers launching crypto trading programmes.

Despite the fact that Hedge Fund Solutions has yet to sponsor a digital assets portfolio manager or launch a crypto-focused fund-of-funds, sources say the endeavour is the latest indicator that big-money investors can no longer afford to sit on the sidelines. According to the most recent data available, the asset management unit had $43.8 billion in gross assets under management as of November 2021.

According to reports, other significant hedge fund investors are anticipated to follow suit.

“People who put their money in these huge banks’ asset management divisions want crypto exposure just as much as the rest of us,” one insider said. “They also don’t always have the know-how to find and vet these managers on their own.” It’s only natural for [UBS] to intervene and make it happen.”

The bank has been busily familiarising itself with cryptocurrency players and studying the ins and outs of conducting due diligence on crypto schemes. Taking stock of crypto managers provides a new set of hurdles for experts used to vetting traditional fund managers, including counterparty risk and custody, asset appraisal, and shifting legislation.

“Even if they haven’t backed anyone yet,” one insider explained, “that’s not always a gloomy indicator.” “It takes time for these things to happen. They’ll have to get used to scrutinising crypto managers. They must also ensure that their [limited-partners] are comfortable with it.”

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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