Attached is another example of Convergence as an expert source on RIA data and trends. Here we outline the migration of a large portion of the RIA industry to Florida. For other trends, see our recently published 2015 State of the Union for Alternative Asset Managers.
Hedge funds eye Florida’s ‘New Manhattan’
The pitch for running a hedge fund from Miami or Palm Beach is hard to ignore, especially after another brutal Northeastern winter.
Taxes are low, slick offices are cheap, there’s easy access to wealthy retirees and Latin American markets, and perks like good schools and ocean-front villas abound—not to mention virtually eternal sunshine.
“It’s just a different quality of life,” said Kelly Smallridge, who has been recruiting asset-management firms from the New York area as CEO of Palm Beach County’s Business Development Board. “People spend an entire lifetime of working to retire to come to Florida, when you can actually earn a living in Florida and live in this environment year-round.”
A sunny pitch
Smallridge and counterparts in Miami have aggressively pushed that argument in recent years in a bid to recruit investment managers to South Florida.
Business development teams have traveled to Manhattan; Greenwich, Connecticut; and Boston to pitch. Florida Governor Rick Scott has called portfolio managers to make the case. When prospects are ready to visit, they’re taken on “red carpet” tours, complete with an airport pickup, lunch at a yacht club and trips to local private schools and office spaces.
The efforts have helped prod several big hedge fund moves. They include $6 billion Universa Investments, which relocated from California, and new satellite offices opened by $13 billion SkyBridge Capital, $10 billion RWC Partners and Affiliated Managers Group, which runs $638 billion through stakes in hedge fund managers like AQR, Blue Mountain and ValueAct. The number of private fund managers registered in Florida has also increased materially since 2013.
Still, investment firms are hardly moving en masse to Florida, and the state counts few private fund managers that run $1 billion or more. In short, observers say it’s hard to call Miami the “next Singapore” or “Wall Street South” as some have suggested.
“Despite the best efforts of various local development interests and certain periodicals pumping a false trend, there is no danger of a hedge fund migration to Florida,” said Omeed Malik, the New York-based head of U.S. prime brokerage sales at Bank of America Merrill Lynch.
“New York City,” Malik added, “has and always will be the epicenter of the financial industry, and neither sun nor subsidies will ever change that.”
To be sure, the region’s stable of registered investment advisors has grown.
There are now 500 money-management firms headquartered in Florida that run hedge, private equity, venture capital or other funds that are closed to the average investor, according to data compiled byConvergence, which analyzes public filings. That’s up from 349 in May 2013 and 408 in May 2014.
A more specific breakdown of what types of firms the numbers represent or how many had moved from out of state was unavailable. Private asset managers are also relatively difficult to define and track, especially smaller ones, making it difficult to quantify their rise in the region.
According to a recent tally by communications firm Newlink Group, South Florida is home to 60 hedge funds, 19 private equity firms and more than 200 family offices. Together about $300 billion is managed by the private-wealth industry in South Florida.
By comparison, New York-based hedge fund firms alone controlled $1.14 trillion as of January, according to HedgeFund Intelligence’sranking of firms running at least $1 billion. New York is followed by Connecticut ($225 billion), Massachusetts ($156 billion) and California ($140 billion). (The totals would be much higher if smaller fund managers and private equity and venture capital funds were included.)