2023 Letter to Stakeholders
2 January 2024
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To say we have been busy this past year would be an understatement! We are excited to detail for you our progress at Eschler. This letter to our stakeholders serves to outline how we add value with our focused business model; what it means to partner with Eschler; the notable highlights from 2023; and our initiatives for the coming year.
Eschler has experienced significant growth this year we onboarded new investment managers, launched multiple funds, upgraded our fund service providers, provided new opportunities for our fund managers such as alpha capture and strengthened our institutional potential in the U.S. In the coming year, our goals include strengthening our internal compliance recordkeeping, building out our operational platforms, investing in distribution and evaluating multi-manager concepts that leverage our emerging manager talent base.
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Financial Performance
Last April, Eschler spun out its internally managed hedge fund into Sorengo Partners Ltd, now an independent single-strategy boutique. With Sorengo now off on its own adventure (more later), Eschler is now a growing platform business singularly focused on serving the regulatory, operational, and business needs of independent fund managers.
Eschler’s business model enjoys attractive attributes such as recurring monthly billing, increasing client diversification and low annual churn.​
Our Culture
Our culture puts the customer first, with the objectives of crisp execution, adherence to regulatory excellence and shared benefits from scale. As a fund manager myself, I have trodden the same path as our managers and seek to understand their needs and provide advice that goes well beyond our core operational competencies. You can read about our story here.
Here are several traits that characterise our approach as a multi-manager firm:
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Our portfolio managers are the star of the show. They are entrepreneurial owner/operators with significant skin in the game and maximum commercial and investment independence. They make their own decisions, subject to rigorously adhering to Eschler’s regulatory policies. “Star fund managers” may have a bad rap these days in the City, but ultimately, we strongly believe that concentrated decision making will remain a prerequisite for outstanding results in active management.​
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Our investment strategies are distinctive and unconstrained while focused on traditional asset classes, liquid markets, and market-based pricing. We are intentionally not focused on private markets.
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Our fees for managing portfolios are clear and transparent, incentivizing strong results which align the portfolio manager with clients. At odds with the broader UK fund management industry, we believe in properly structured performance fees, thereby attracting ambitious investing talent looking to start from the ground up. On the other hand, we intentionally avoid open-ended pass-through fees and double-layered fees so common amongst agents in the alternatives industry.
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Our clients, on balance, are asset owners with a long-term orientation who accept that investment results are not a straight line. We tend to repel agents just looking for a smooth ride.
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Regulatory Landscape
In 2023 we saw increased interaction with regulators on both sides of the Atlantic. This is inevitable and expected as the scope of our activity expands. Our viability as a reliable partner depends on proactively meeting numerous regulatory requirements. For example, when in doubt we proactively self-report technical breaches. We are also planning a thorough review of our internal records in the coming year. In April, we successfully completed a routine SEC examination. The Financial Conduct Authority here in the UK is also taking a greater interest in multi-manager business models such as Eschler. We expect more frequent information requests which will require more detailed input from our managers than in the past. Despite some inherent decentralisation in parts of our business, our “one firm” regulatory approach and investment in compliance resources ensures we are ready to respond to enquiries.
Goals for 2024
Our reinvestment priorities for the coming year target more turnkey operational solutions and growth optionality. ​​Our goal has been to share the benefits of greater scale with our fund managers, increasing retention and referrals. This is working and we’re convinced our small but growing business network is now more valuable than the sum of its parts. Judging by the quality and breadth of our pipeline, the business is set for significant growth.
Are you an aspiring independent fund manager with experience, grit and working capital looking for a business partner? Or perhaps you know a talented fund manager who might benefit from Eschler’s services? Maybe you are interested in gaining customised, diversified exposure to emerging manager talent without a double layer of fees or pass through costs? Or, having read this letter, do any business opportunities come to mind that we might discuss? If so, we are all ears for new ideas and encourage you, our valued stakeholders, to get in touch.