SBAI Newsletter - July 2021
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In this month’s newsletter:

•    New Stakeholders
•    New Publication: SBAI Toolbox Memo on Indemnification Wording in Fund Offering Documents
•    SBAI Working Groups Mid-Year Update
•    Event Summary: Does ESG add Alpha? A Systemic Strategy Perspective
•    SBAI Introduces a New Team Member: Tina Hu
•    Save the Dates
•    New Vacancy: Events Manager (Maternity Cover)
•    SBAI Survey
•    Upcoming Events 

New Stakeholders

The Standards Board is delighted to welcome a new addition to the SBAI family.

  • Angle Point Asset Management Limited (Hong Kong)


New Publication: SBAI Toolbox Memo on Indemnification Wording in Fund Offering Documents

The governing documents of most alternative investment funds include indemnification clauses. These clauses are important to investors as they highlight the circumstances or events where the fund may be required to reimburse the asset manager for losses related to the management of the fund. How these clauses are drafted can have implications for investors, as the use of different standards of care has significant impact on the types of loss events that asset managers can claim against the fund’s indemnity.

Our newest Toolbox memo discusses:
  • Spectrum of Wording: The scope of indemnification and the cases that are carved out from this clause can be held to difference standards of care such as negligence or gross negligence. Investors need to understand what will and will not be covered by this indemnity.
  • Regulatory Guidance: There are jurisdictional differences in law and regulations on this topic. For example, in some jurisdictions there is no legal difference between “negligence” and “gross negligence”.
  • Potential Issues: The memo explores some of the issues that both asset managers and investors should be aware of such as the scope of the indemnity, consistency of wording between different governing documents, the investor’s ability to sue a manager, insurance, and the survivability of indemnity claims. 
This memo was produced by our Governance Working Group and can be found in the SBAI Governance Toolbox.


SBAI Working Groups Mid-Year Update

Our working groups have been hard at work in the first half of 2021 on a variety of topics with memos published on Responsible Investment Policy Frameworks, Side Pocketing in ILS Funds and Indemnification Wording in Offering Documents. In the second half of the year, we will be publishing content on Responsible Investment in different alternative investment strategies, crypto asset due diligence, culture and diversity, access for foreign managers to Japanese pension funds, guidance for Chinese onshore managers looking to expand offshore, and more. All of our published memos can be found in the SBAI Toolbox.

Below is a brief summary of our working groups and the topics currently under discussion. To learn more about our Working Groups or to get involved, please contact us at


Working Group
Responsible Investment (RI)
The group is currently finalising guidance memos on the practical implementation of RI within equity long/short, credit, systematic, macro, and insurance linked strategies. After the summer, discussions will begin on the following topics:
  • Governance of RI in the Investment Process – How to structure the process, capture data, and evidence the processes disclosed within RI Policies.
  • TCFD and Climate Metric Reporting – Discussion on how to do this with asset classes outside of equities.
Culture and Diversity
Work is underway on three initial publications this year:
  • Principles of Diversity – How to structure a diversity initiative
  • Beyond the Metrics – Primarily aimed and small and mid-size managers looking at how to demonstrate (and how allocators can assess) diversity commitments without over-reliance on metrics
  • Increasing Diversity in your Portfolio – Practical guidance on how to help allocators increase diversity in the manager selection process.
This group is currently looking at frameworks for the internal governance of firms and how this will change as a company grows. Future topics in this group may include revisiting our cyber security guidance in line with recent developments.
Standard Investor Profile Template
Having agreed the basis of a template to collate the standard information that investors are required to provide when subscribing into hedge funds, the group is now focused on discussions with administrators and law firms to ensure any such template would be practical and effective.
Alternative Credit
This group is currently discussing what the key issues are in credit in order to identify future working group topics. These may include items such as risk reporting and private credit operations.
Alternative Risk Premia
Discussions are currently taking place on the topics of benchmarking factors and risk reporting of factors.
Insurance Linked Strategies (ILS)
Having recently published a memo on Side Pocketing in these strategies, new areas of exploration may look at definitions and terminology in the space both in the context of the portfolio and for risk exposure reporting.
After the upcoming publication providing guidance for Chinese onshore managers expanding offshore, the group will look at topics such as operational due diligence of Chinese onshore managers, and applicability of the Alternative Investment Standards to Chinese onshore managers.
After the upcoming publication looking at foreign hedge fund manager access to Japanese pension funds, the group will reconvene to discuss ideas for future topics.

Event Summary: Does ESG add Alpha? A Systemic Strategy Perspective

ESG is a broad narrative and traditional data based on historical information may no longer be appropriate for this forward-looking area. In systematic strategies based on risk premia or trend following, there are additional elements to consider, and alternative methods such as sentiment analysis may be required going forward. The panellists included senior speakers from LFIS, Man Group and Quantica Capital. Key takeaways:

Does ESG add Alpha? - Through the Factor Lens
The performance of investments can be assessed through statistical analysis to identify whether there is a systematic component of returns that can be attributed to ESG on top of exposure to standard factors (such as quality, size, etc.) and sector exposures.
  • There is no evidence of an ESG Factor: Analysis Based on Traditional ESG Data, such as ESG ratings, does not show ESG outperformance. 
  • ESG Exposure to Traditional Factors: Straightforward ESG strategies on equities (long good ratings and short bad ratings) do not show structural exposure to traditional factors but do show certain biases: negative correlation to size factor: typically, the lower the capitalisation, the lower the ESG score, and positive correlation to low volatility factor: typically, the lower the volatility, the higher the ESG score.
  • Time Variation Challenges: There is some indication of time variation in ESG alpha which may be linked to investor flows linked to ESG sentiment. Investing through a traditional systematic lens has limitations in this environment as shifting preferences lead to a new market equilibrium.

ESG and Trend Following:
Trend following strategies (also called CTAs, or momentum strategies) are based on market forecasts informed solely by recent price movements or trends based on the assumption that these price trends tend to endure.
  • Focus on Exclusions and Inclusions: Most dedicated ESG approaches in CTAs are via investor requested exclusion or inclusion lists. Investors display different preferences on what should be excluded, which means these mandates typically have to be operated via separately managed accounts (SMAs).
  • ESG Futures and Indices: There are many of these coming to market but there is still relatively lower liquidity compared to traditional futures and indices, which results in higher cost of trading which can impact alpha.
Our Responsible Investment Toolbox is available here and our Responsible Investment Working Group continues to discuss strategy specific implementation of ESG. For more information contact us at


SBAI Introduces a New Team Member: Tina Hu

We are delighted to introduce Tiina Hu who joined our team this month as our APAC Coordinator. She will be engaged in the activities of the APAC Committee, APAC-focused working groups and generally supporting our initiatives and events in the region. Tina has taken over from Becky Xu who has started a new chapter in her career. We would like to take this opportunity to thank Becky for supporting our endeavours in the APAC region and wish her success in her future. 

Tina spent 11 years at Goldman Sachs Hong Kong first in the FICC department and then in the Investment Banking Division. Later she joined FFC Corporate Finance Limited, where she primarily worked on private equity investment transactions and post deal portfolio management, including working briefly in one of the portfolio companies at the operational level to develop its Asia business. Tina has a MSc in Global Finance from New York University and Hong Kong University of Science and Technology, and a BA in Economics from Peking University. 

We wish Tina well in her new role and look forward working with her on the current and future projects.


Save the Dates

The SBAI is delighted to announce its upcoming events in the 2021 Autumn season. Please save the dates below. Invitations with detailed agendas and speaker information will be sent in due course. 

8-9 September 2021 

Join senior industry experts from firms such as Blackstone, CPP Investments, Hillhouse Group, Hong Kong Monetary Authority (HKMA), Noah Group, PAG and more, discussing Regulatory Perspectives, APAC Alpha Opportunities, China, and Responsible Investment. We are delighted that the 2021 SBAI Annual APAC Forum will include both virtual access and a limited number of in-person places to allow our APAC community the chance to come together again.

SBAI Annual General Assembly 
6 October 2021

Industry leaders will be discussing topics, including Family office and Endowment priorities and perspectives and the changing face of risk management. We are pleased to announce that in addition to virtual access, SBAI stakeholders will be able to join us in person for panels, networking and roundtable discussions.

Event replays
The recording of our webinar “Does ESG add Alpha? - A SBAI Systematic Strategy Perspective” hosted on 13 July 2021 is now available to SBAI stakeholders. Please click this replay link to register and use this access code Ah9A&vo3 after registration.

Private Markets Operational Leaders’ European Summit
18-19 October 2021

The SBAI is delighted to collaborate with this new event designed for COOs, CFOs and senior finance and operational leaders across Europe. Maria Long, our Research and Content Director, will be speaking about culture & diversity on a panel "Creating a World Class Team. This in-person event will be hosted at The Four Seasons Hotel Hampshire. Please click here for additional information.

SBAI Survey

We recently circulated a survey to our stakeholders to share your views on the SBAI and its activities. We would be grateful if those of you, who have not completed our survey yet, could provide feedback using this link.

As part of the SBAI community, we value your opinion and are constantly looking for ways to improve the value we can add to you and your organisation through our events, content, and initiatives. 


New Vacancy: Events Manager (Maternity Cover)

The SBAI is delighted to announce an exciting opportunity for an experienced Events Manager to run the SBAI’s virtual and in person events for the period of 12-14 months. 
The position can be part time or full time. The candidate does not need to be physically in the office and remote working is offered, preferably in the UK/EU/US East Coast time zones. The successful candidate is anticipated to take up appointment in September 2021. The full job specs are available here.


Upcoming Events

  • 8-9 September 2021: APAC Forum (virtual and in person)
  • 6 October 2021: London, Annual General Assembly (virtual and in person)
  • 2 December 2021: Montreal, Annual Institutional Investor Roundtable

More events will be confirmed in due course.
Angle Point Asset Management Limited
AnglePoint is an equity-centric long/short investment manager based in Hong Kong. It was founded in 2018 and spun out from Hillhouse Capital in early 2021. AnglePoint is a long-term fundamental investor with a thematic-driven approach. The firm takes a global perspective on its investments and seeks to cross-pollinate ideas across geographies, with a focus on China. AnglePoint believes in not only adhering to best practices in disclosure, valuation, risk management, governance, and ESG, but in working with the industry to improve these practices to meet the challenges of tomorrow. 
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