David Singh – Preserving Capital for the Next Generation
David Singh, Chairman and CEO of Swiss Alpha Management:
David Singh has a long and distinguished career in finance and banking spanning 27 years: 18 years of wealth management & advisory experience with family offices, and UHNWI; 9 years of Investment Banking & Trading experience during which time David was a Proprietary and Structured Derivatives Trader, covering all asset classes.
David has deep relationships with many Premier Families and Family Offices, developed over 18 years, and whereby David was providing bespoke asset management and structured solutions to generate revenues and mitigate risk.
David has also spent 2.5 years as an Independent advisor at Board level to Credit Suisse Group & Depfa Bank.
In addition to the above, and for more than a decade, David has been CEO of the Family Office for a prominent Abu Dhabi Royal Family. David has developed a robust and elite network of investors and financial institutions across the GCC.
In 2007, David lead the restructuring and subsequent sale of a listed European Bank for €5.4Bn: his largest M&A deal to date
Mark Waters, Director at Swiss Alpha Fund Management
Mr. Waters has launched and managed the roll-out of several currency exchange and commodities trading platforms, among other investment vehicles. He has negotiated and secured the distribution of several financial products through companies such as Entrust and Steele Capital Management, among other securities broker-dealers, RIA’s and CTA’s.
As Vice President of the asset management division of Vision Bancorp AG, Mark Waters had global responsibility for identifying strategic partners, managing trade finance and algorithmic platforms for institutional clients, family offices and UHNWI. Vision Bancorp had offices in the UAE, Switzerland and the United States. Mr. Waters raised over $1 billion dollars from clients into global projects including mining, real estate, green energy, and trade finance and investment platforms.
Previous experience includes banking, and consulting, with expertise in commodities trading, MBS, project finance and working with sovereign funds and government bonds. Expert in vetting and structuring complex trade and project finance across the US, Europe, Africa and the Middle East.
Alan: Hi, this is Alan Olsen and welcome to American Dreams. My guest today is David Singh. He’s the CEO of the Swiss alpha management group. And we also have Mark Waters, who’s the director with Swiss alpha management. So welcome to today’s show.
Mark Waters: Well thank you Alan
David Singh: Thank you
Alan: you know, in. In today’s interview, normally we do one on one we have two, we have the pleasure of having both of you together, and which I consider this as a simple add on to give more value to the listeners. And so I’m going to walk through this first I want first to ask, ask David a couple questions as CEO and chairman, of the Swiss alpha group, can you tell me a little bit about your background and how you got to where you are today?
David Singh: Yeah, certainly. So I’m 54. And I started my career in investment banking in London, actually, as a trader at Credit Suisse, financial products. I’ve been a trader in investment banking for about nine years. During that time, I covered the five main assets, and specifically was focused on equity derivatives, and structured products. Most of my career was spent in London, Switzerland, and I also did a stint in New York. The latter part of my career, I was a head of trading for Europe, for Citibank, based in London, the same products, derivatives, equity, derivatives, etc. Then, in 99, I moved to Switzerland, took some time off to think about what I wanted to do next. And it was at that point that I formed three businesses, one of those is Swiss alpha. and switch alpha is actually a multifamily of it has locations in nine countries. And we are effectively a multifamily office managing assets, and generational wealth, which is coming from Asia, and the Middle East, predominantly, most of our mandates, capital preservation, not particularly exciting. It CPI Plus, you know, two or three per year, which is not particularly interesting for most clients. But for generational wealth, I think they have a strong leaning to have to be the next generation. And they have generally enough risk in the operating businesses. So that’s not that’s what we’re doing there. Swiss Alpha is also focused in private equity, as well as some m&a which we are doing from time to time, largest m&a transaction to date was a euro 5.4 billion sale of a listed Bank of German bank, which we did in October 2007. And I was one of the lead for that, as was my group. Transaction today on the m&a side. as traders, we’ve been through a few different things in our time. And now it’s my 27th year in banking and finance. And we’ve gone in the early 2000s managing assets that sells in the market by having a team of traders and to now evolving into I believe is a much smarter and to apply on the funding model, as well is tested managers typically have an overnight record of success, as well as investment within that long track record of success as well as this and very clean backgrounds which will be protecting and regulated. So that’s the business. And I think it’s 2019 we established a presence in the United States. And we have offices in beach in California, and also in Utah, Salt Lake. And basically from there we have a lot of business and we’ve lighting quality talent, such as business development. And we also have on our crews, working in the Utah office and things We are sec registered with our phones. And it’s early days, but the things that we always like to start any business, we have a very conservative view on risk and we try to view clients capital preservation mode. And then basically, yes, allow Mark is okay. I’ll hand it back to you, and see if it meets your requirements.
Alan: Thank you. Okay, so let’s move over and to Mark. You’re currently out of Minneapolis. But you’re all over the place. In traveling, is that right?
Mark Waters: Well, pre COVID. I was traveling the globe pretty extensively. Since COVID. I have not been doing near as much travel.
Alan: Let’s walk through your background and what brought you into Swiss alpha management?
Mark Waters: Sure. So my background is, ironically enough. I got my initial college degree in Kinesiology and exercise physiology. And I fought professionally in mixed martial arts for 10 years. And that opened the door to a lot of professional athletes and people, which was fun physically, but I was bored mentally. And so I started getting into some private equities and venture capital. And I stumbled into the world of more global finance. And I was fascinated. I helped roll out several currency exchanges and commodity trading platforms, through CTAs and cpos. here in the States. In 2012, I was appointed as Vice President of asset management for a company called vision Bancorp out of zooks, Switzerland, and we had a physical commodities team that did a lot of anything from coal and oil and crude to sugar, and wheat and rice. And my focus was just on building around our proprietary trading desks that we put together, which was a very similar model that we have here with our funds. So vision ended up switching their focus to only European models in about 2015, we’ll call it. And so I started working on some project financing other things of that nature. When I was introduced to David, and we started talking, it was a perfect fit, right? It was a match made in heaven, because I love taking these alternative platforms, and taking them to the marketplace. You know, most investors out there think, well, geez, I can either go to Morgan Stanley, or I can go to Edward Jones, or I can go to Dane router, and I’ll be sold the same over the counter products. And there’s better investment. So that’s my quick overview as to where I started and how I ended up here.
Alan: Thank you. I’m going to roll back to David. Now, David, in your day, as a founder of the Swiss alpha group and multifamily office, you see quite a bit of moving in financial markets, and specifically, you’re not limited to just the US. But global. But I want to I want to roll a question back into as you know, from your perspective, what is the outlook of the US markets, and we’ve run up hard and fast. And, you know, there’s a lot of craziness in this world. But how do you feel about the investment sentiment here?
David Singh: You know, I think there’s a couple of opposing factors. Currently prevalent in the market. The first major factor is the wall of liquidity that’s been released by the current administration to support businesses and the population through COVID. And you’ve seen a rather significant stimulus packages, including I believe, this morning when the Senate has passed the 1.21 point or 1.3 trillion infrastructure bill. So you can see an enormous amount of liquidity available in the marketplace, that is clearly going to, in some form in into corporate America, which of course will fuel stock markets in the short to medium term. Opposing that, of course, are the forces of inflation. And we’ve all read the horror stories of how much printing the Fed has been doing over the last 20 months or so. And some of those numbers are actually quite frankly horrific. So I think there’s a somewhat of a ticking time bomb here, which is the liquidity and the bubble which is being formed from this wall of money flowing into the market. And that rate, trying to juggle the inflationary picture which is ominous, and clearly they recognize that this is this is something which will require actions in future on tightening of rates. So I think we have those two forces. But at the end of the day, in the short term, the sheer volume of liquidity will continue to ride the market.
Alan: You know, I want to I want to do one follow up question with you, and then we’ll roll over to Mark. But, you know, a lot of the multifamily offices or the, the ultra high net worth individuals are looking for finding certainty, lessening risk in markets. And so when, you take on a new client, what is the value proposition that you, offer to that relationship?
David Singh: So what we’ve basically done is, first of all, the selection process that we have to identify our fund or fund managers is extensive, and it can last for up to three years. During that time, we regularly visit with the fund managers themselves, not just the board, but the actual traders. And then what we tried to target is superior market returns. And for example, I think in Europe, we have a great depth of financial expertise. And certainly London is one of the centers that everybody recognizes as a serious financial center for fund management and capital. And then we have Switzerland, and we have some using a great deal of smart capital. And they’re also deploying smart capital. So in a nutshell, what we tried to do is I buy managers who are consistently in superior market, we can and, also look at their track record. So we specific ages, which haven’t had five years, that narrows the universe of potential investors down to a very small number. And then we probably have maybe five or seven of those groups around Europe and Asia who fit that bill. And then what we do is we try to diversify our portfolio across those managers. And each of those managers has got four or five portfolios and strategies inside their firm. So the name of the game is to A provide superior market returns, and B to provide a diversification of the client’s asset base across different asset classes are typical. So that’s our process. And that’s why, this is a fundamental, robust value proposition for clients.
Alan: So for the listeners share Mark guy, new client coming in or family office, what is your minimum that you’ll consider taking on a relationship?
Mark Waters: Well, at this point, we’re focused on accredited and qualified investors. So to make that easy, we set the minimums at $1 million. Because that automatically triggers the accredited investor status. If you’re liquid for a million dollars, then you’re an accredited investor. So at this point, that’s that’s where we’re starting at. But that’s not to say that people couldn’t start a company with a couple of friends and get creative, you will have to talk to your attorney first. But I’ve seen that structure done as well where four guys need to put in 250,000 to set up an LLC, get it registered and have that be the investor.
Alan: So there is a recently the US when they went through their banking, Okay, so recently Mark, your role is a US arm to a Swiss bank. You know, in the last eight years, they had all this foreign bank account, reporting regulation that the US government had put out, and a lot of the Swiss banks where they have prided themselves on secrecy houses and found themselves under the microscope. So when they’re dealing with the using the name, the Swiss alpha management, can you clarify is all that inside of the US for the most part is it under the SEC.
Mark Waters: So we have the Swiss alpha Fund, which is a registered fund with a fund of funds offering that’s fully registered in the US here. These funds aren’t necessarily going to Switzerland and not necessarily Going into a set bank, I know exactly what you’re talking about. Because post Dodd Frank, the IRS went and kicked the doors in at UBS and Credit Swiss and said, we’re gonna find you. For all the American account holders, it made things really tough for US citizens. What this has basically become as a conduit. We’re not just in Switzerland, we’ve got managers all over the G 10. countries, that David has selected because of his background. So when people are coming in, they’re getting the best of the best in traders over there that are focused on principle protection first and above average market returns. So it does not have the same level of scrutiny. As say, you Alan trying to come over and open an account at Credit Swiss. That’s extremely difficult in Switzerland itself. fund to fund models where it is a conduit from the US into these traders.
Alan: Thank you, I think it kind of created a PR nightmare for the financial world, although they were running everything trying to get good returns as the government sticking its nose into things never makes life easy for the free market. So anyways. Okay, so, let’s move back to David. You know, David, can you walk us through the selection process you go through when you look at potential investments and doing your due diligence?
David Singh: Yeah. So as you are aware, there are 10s of 1000s, if not hundreds of 1000s of regulated funds in Europe and in Asia, as well as United States. So fund managers is enormous to do is we do a first cut any manage regulated as the first time and we don’t want to we can’t do is managed to have not been in business for at least five years with order to track record. That’s the second cut. And then the third cut is we speak to those managers that we’ve selected on the basis of diversification. Because we don’t need more than three managers doing the same type of longshore or hedging strategies, we tried to select the top two or three that we find. And by the best I mean those with the consistent above average market returns, and the lowest drawdown number, any one year basis. So that’s what we define is the best. And we do a short list of the arduous process which takes several months, we do rely on our banking network, we have an excellent network of banks, which we work with. And we rely on them to assist us with their managers. For example, if we were to look at Morgan Stanley or JP Morgan, they have a preferred list of managers that have been through their due diligence. And we have access to that. And we tried to leverage that and we look even one step further. So Morgan Stanley may have something like 45 or 48,000 funds on its platform, we tried to select the top 10% of that, that’s still an enormous number. And then from that 10% we put our filtration on five years in business, no drawdowns in five years. audit your track record outperforms the market every year. And slowly our potential fund managers gets narrowed down to a handful of the original 45 48,000 lists that Morgan Stanley’s got. And we do the same process with with our other tier one bank relationships. And over a period of years, we’ve developed our database of fund managers, which fall into a very specific being, I would consider the elite managers in the world. And there’s a lot of intellectual property there in terms of our selection process and the maintenance of our database as well. That’s mostly done out of London and Switzerland. And we have some analysts working in Swiss alpha for many years, which you’re managing. Along with that selection system, the initial identification process, we then start the actual hard work of speaking to the fund managers themselves. And that process can last for up to three years in terms of quarterly calls, sometimes a visit, annual visit, for example, to meet the CEO and the board, and some of the traders and over that three year period, we get a very good understanding of the culture of the manager and also the regulated environment that they’re in, you’ll bear in mind that in Europe, we have 27 member states. It used to be more when the UK was in there. And those member states all have their own regulator. Some of those regulators are regarded as very stringent. For example, the UK is very stringent Germany, another very robust regulator. And then I would say there are other examples of weak regulators where the barrier to entry is quite low. So we tend to avoid those regions and locations because we don’t believe it offers us the comfort that we need when we’re deploying assets into those regions. So that’s another series of filtration that we apply to our selection process.
Alan: Well, we’re running short on time here, but I want to give you the opportunity to let our listeners know if they want more information or to visit with either one of you How would they go ahead and do that? What’s the best way to be chunk contact?
Mark Waters: it’s firstname.lastname@example.org
David Singh: Yeah
Mark Waters: Correct.
Alan: Okay. And, any comments, this is a last parting comment is a curveball. But any comments on the crypto markets? Are they here to stay? Or are they a fad that we’re going to see come and go?
Mark Waters: I’m leaving that one to David.
David Singh: Well, I’m with the regulators and the tier one banks on this. I’m not a believer in crypto, I don’t really understand what the drivers are fundamentally. And I think that if you look at any other market, for example, the s&p or gold or any of the other markets, if some celebrity comes out and says I’m going to be doing x, y and z, you might have a short term effect of half a base half a percent maximum, when Mr. Musk comes out and makes a statement about certain Bitcoin that can move the market 30%. And there’s something fundamentally wrong with any asset classes, is just that susceptible to this type of background noise? So we don’t hold any assets in Bitcoin or crypto. And there’s a reason for that is we are fundamental investors. And we’re looking at you know economic fundamentals as the basis of what we do. And I certainly am not qualified or to say I understand what grows Bitcoin. And on that basis, I don’t invest in it.
Alan: Thank you. Great comments. I appreciate having both of you here with me today. And look forward to staying in touch for the future.
David Singh: Thank you very much.
Mark Waters: And Alan, I’ll email you after the show. phone number and that email again that you can post to your listeners.
Alan: Okay, then we’ll have that in there. Okay, correct. All right. Thank you to both what an honor David, for you to join in today. So thanks. Wonderful.
David Singh: It’s been a pleasure. I appreciate it.
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This transcript was generated by software and may not accurately reflect exactly what was said.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio