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Will More Hedge Funds Move to Florida?

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Florida offers hedge funds lower taxes and easier access to private Latin American banks, so will more of them move to the Sunshine State?

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Hedge funds are packing up and heading south. Is this a continuing trend or a brief part of the financial sector's ongoing evolution?

Apex Fund Services -- one of the world's largest independent fund administration companies with more than $20 billion of assets under administration -- recently opened a new office in Miami, Florida. Vincent M. Sarullo, Managing Director of Apex Fund Services in the US, told StreetID that his company was drawn to the "significant growth in the south, specifically the South Florida region."

"And more recently, in the past year or so, having a bigger move of managers from Latin America coming into the area and setting up shop and having a presence there, either to attract US investors to invest in Latin America, or bring Latin American investors into the US to take advantage of the US markets," he said. "After seeing that spike, we thought it was only a natural fit to place an office there and serve our clients in the south, whether it's the Carolinas, Florida, [or] Texas. It seemed to be the right fit."

Thalius Hecksher, Global Head of Business Development at Apex Fund Services, believes that the trend will continue and more hedge fund managers will move to Florida.

"Already we are seeing a lot of momentum behind what Florida can offer hedge fund managers," he said. "It's a clear indication -- a lot of the major private banking names are there right now, both North American and South American. Florida and Miami truly is a little bit of a hotspot. We definitely believe it's the right place for Apex to be."

Apex was particularly attracted to the "huge amount of economic development" going on in Latin America. "Brazil has the 2014 Soccer World Cup and the 2016 Olympics," said Hecksher. "It really is making a lot of noise there. In addition to that, the Bahamas has realized that their fund structure has become very attractive to high-net worth individuals based out of Brazil. Again, with the Bahamas being on our doorstep, we're definitely going to see an awful lot of flow coming our way."

Hecksher said that one of the key drivers for Apex is that it functions on a push-and-pull philosophy where its clients "pull us into a territory and we'll push ourselves in."

"Over the last 18 to 20 months, we've noticed that we have a couple clients there, and Vince took the view that we could better serve them more locally," Hecksher explained. "As a result of that, we have also [gotten some managers on board] from Brazil and other Latin American countries."

After conducting a number of business trips to Latin America, Hecksher learned that many Latin American hedge fund managers see Miami as the "meeting of the Americas, or a gateway for North America to South America."

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