Mr. Gerken: GCA is an alternative asset fund manager with a primary focus on the emerging markets. We manage and advise 1.3 billion in AUM and I serve as the Group CIO. Our client base is primarily institutional, both US and offshore. The firm was established in 1989 and we are a San Francisco Bay Area-based firm. We are registered investment advisors. We have 10 investment professionals and the firm is 85% employee-owned. Our investment platform and team skill set leverages three major paradigm shifts that very much work to our favor. First is the transition of long-only oriented investment portfolios to include the alternative asset classes that began in the early 1980s but are still very prevalent today. Second is the importance of small to mid-sized, employee-owned asset management firms in generating superior investment results for investors. Most large asset management firms are excellent at gathering assets, have very established and capital intensive infrastructures, e.g., risk management, and are aggressively moving toward open architectures where they select the better performing investment firms for their client base. Third has been the transition of the emerging markets to emerged markets and the hand-in-hand capital flows of G7 FDI and FII into these markets. Collectively, these paradigm shifts are not short-term phenomena but rather the early stages of the "efficient frontier" for managing capital looking forward. Our alternative asset platform consists of both single manager hedge funds and a private equity fund-of-funds business. For our hedge funds, we have a BVI-based master-feeder platform called GCA Funds Limited. It has five segregated share classes, each representing a designated emerging market and each positioned as a multi-strategy fund. GCA Greater China was launched in 2005 and we launched our Latin America Fund in 2007. Looking forward we are hopeful to launch our Greater India and Greater Russia funds this year, and our Middle East fund the beginning of next year. With our completed emerging markets hedge fund investment platform, investors have the ability to invest in one or any combination of the underlying funds and can also rotationally trade between the share classes monthly. From the perspective of our portfolio managers, it provides us with the added alpha differentiator of being able to spot cross-BRIC investment opportunities that wouldn't necessarily be the focus of a region-specific fund. We think this is a tremendously underserved segment of the market, given the growing levels of cross-BRIC FDI capital flows, and capable of generating some exciting investment opportunities. We think there are three important differentiators in our Funds when compared to our top-quartile performing competitors. First, our investment strategy is strategically designated as multi-asset, multi-strategy. This is significant, given that the emerging markets are growing very fast and rapidly playing catch up with G7 standards for transparency and availability of financial instruments and products. Notwithstanding that we operate in fast growing, equity long-short bias markets in the medium to long term, we find it essential to have the skill set and flexibility to dynamically manage our capital across the various asset classes as they develop in the underlying regions. Anecdotally, Taiwan, Brazil and Mexico barely had equity derivative markets five years ago and today rank third, fifth and seventh globally. As such, we don't want to have the best equity long short team focusing on China to find out that 2008's P&L attributes come December came from a mix of other asset classes and investment products. Therefore, our approach requires us to take a top-down view where we optimize the underlying asset allocation mix to capitalize on the prevailing investment climate. Our second area of differentiation is our return profile. In a world of 10,000 hedge funds that are all "top quartile performers," our objective is not to hit the ball out of the park, but rather to hit a series of consistent base hits matched with soft landings when there are corrections in the markets. By way of example, our Greater China Fund has been up or flat in seven market downturns since inception in 2005. We think superior performance is not measured by a fund's ability to generate returns, particularly when the tide is rising (medium to long term rising), but how the funds do during periods of market downturn. Also important is how the managers perform during extreme periods of panic when there is blood on the streets. GCA's last major differentiator is our structure. This is always a challenge to communicate because listeners always inherently shy away from something that is not the norm. That said, I mentioned early on the importance of selecting small to mid-sized, independently owned asset management firms. Their investment performance by and large is superior to the large investment firms for a host of reasons, not the least of which is "skin in the game." These owner-operated firms feel the investment return "pains and gains" of their investors and therefore their economic interests are truly aligned - and this is imperative. The Achilles heel in this is that despite their best intentions, small to mid- sized firms do not possess the balance sheets of their larger firm counterparts where infrastructure requirements, particularly risk management, are very capital-intensive line items, not just to implement but to maintain thereafter. This is the primary source of operating risk that faces emerging managers and moreover in the emerging markets with their very fast growth and moving parts. GCA's approach is to marry the best of both worlds by way of judiciously identifying "the right" regional investment firm to become its long-term and exclusive affiliate. Here we look to our local emerging market partners for their embedded risk management and mid-office infrastructure and for their ground research presence, which is most important in direct meetings with small to mid-cap companies that drive 50% of emerging market GDP growth. Here, we spend the majority of our time with regional partners' pre-fund launch in ensuring that their investment, risk management and operating platforms are fully integrated with our AIMA sound practices. For each fund, GCA has a 100% dedicated PA and Associate PM. The PM typically co-offices with the regional affiliate and has full portfolio investment authority. The Associate PMs are all based in San Francisco where they act as back-up PM, provide research ideas to the PM and jointly collaborate in generating cross-BRIC investment ideas. The Polaris Group, Taiwan's largest listed investment house, is our Greater China Fund Affiliate Partner. BBVA, the largest asset management firm in Latin America, is our GCA Latam partner. The byproduct of this structure is that we typically launch our funds with the largest on-the-ground investment team serving the market and with the embedded infrastructure to scale AUM uninterrupted by the operating risks facing most emerging managers, particularly in the emerging markets. The final result or end game of this three-point differentiation is to position ourselves as an institutional grade management team. Our view is that superior investment results are at best temporary if you cannot withstand the test of time. We also think this very relevant in that the world does not need 10,000 hedge funds and that there will undoubtedly be a material consolidation in the space, which is not necessarily a bad thing given a no barrier to entry business. Very briefly, our private equity business is a fund of funds business only. Principals at GCA launched their first fund back in 1981 (candidly, not even knowing that it was a fund of funds) and we launched our most recent in 2001. This will be our sixth fund and we propose to complete our initial close in 2008. The fund will be 100% emerging-markets focused and reserve 20% for related co-investments and secondary investments. We are presently talking with select parties interested in an anchor/sponsor role in the fund. We seek to raise 300 million in capital commitments for the fund. We look very favorably on the prospects for the fund, given our view that the vintage period of investment will match nicely with our outlook for private equity investing in the emerging markets.
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