Promoting a new way of working within asset management

Noviscient is an open platform fund, based on machine learning, cloud computing and artificial intelligence, which partners with smaller hedge fund managers (as well as independent systematic traders) to help them grow. While smaller, agile hedge funds tend to outperform larger hedge funds with regards to capturing alpha, they cannot achieve the economies of scale necessary to ensure their funds remain profitable. As a result, often investors, particularly institutional ones, are unable to, or choose not to invest in these types of small funds.

To address this issue, Noviscient has devised an open investment management ecosystem whereby it receives trading signals from its alpha partners, dynamically allocates capital and thereafter trades the strategies, after which it provides partners with a share of the profits, enabling them to grow their capital through performance.

Challenge: find a technology-driven prime broker

Noviscient has ambitious growth plans, aiming to have $100m AUM by the end of 2020 and $5bn AUM in the longer term. The firm's target investor base is institutional investors and large family offices that are unable to invest in small hedge funds due to strict investment criteria, the inefficiencies associated with multiple due diligence processes and the level of investment which can be accepted by smaller funds.

In order to attract investment into these types of funds from institutional investors, amongst other things, Noviscient needs to be able to demonstrate that it is partnering with best of breed providers in all areas, including prime brokerage.

Noviscient was one of the first funds to get the Singapore-domiciled Variable Capital Company (VCC) vehicle. In the lead up to the official launch of the VCC framework in Singapore, Saxo and Noviscient collaborated closely to set up their respective necessary structures and processes to be ready for business at the time of the MAS launch.

"We work with Saxo to execute trading signals from our hedge funds partners in order to offer customised alpha products for institutional investors that gives them exposure to smaller and more innovative managers that they otherwise are not able to access."

"By leveraging Saxo’s technology, we could get to market quickly with the new VCC structure which opens up many opportunities for us to access and service hedge funds and family offices in Singapore"

Scott Treloar
Chairman and CIO, Noviscient

Solution: access multi-asset execution and post-trade services with full transparency of portfolio holdings and performance

With the requirement to demonstrate best practice, Noviscient selected Saxo as a partner as unlike many prime brokers which operate on legacy technology, Saxo's prime brokerage services are truly based on innovative technology.

In particular, via Saxo, Noviscient can access tailored multi-asset liquidity and post-trade services via a single API (OpenAPI and FIX API). As a result, Noviscient benefits from real-time reporting and a flexible account management structure - with master accounts and sub accounts - all from a single margin account.

Further, Noviscient can access more than 40,000 instruments across multiple asset classes with execution, financing and real-time risk management from a single clearing and custody account.

Current and future success

More widely, Noviscient is exploring ways in which it can collaborate with Saxo to leverage certain aspects of SaxoSelect, Saxo’s fully integrated automated portfolio management solutions to both firms' advantage. Further, Noviscient believes that it has benefited from being part of Saxo's trading community through networking opportunities and brand recognition, particularly in the Danish market.