Bermuda’s international business infrastructure makes it an ideal jurisdiction for managing funds.That is the view of Daniel Tafur, who along with a fellow former Morgan Stanley portfolio manager Fabio Lopez Ceron, has set up a new independent asset management firm called Equilibria Capital Management.The company’s flagship investment fund is the EQC Global Opportunities Fund, which now has a net asset value of $100 million.The fund was established in 2009 and was managed by Mr Tafur from Morgan Stanley in London. Earlier this year Mr Tafur and Mr Ceron took the fund out of Morgan Stanley and now continue to run it through Equilibria.The fund has achieved a return of 80 percent for investors since its launch in March 2009 although chief investment officer Mr Tafur stresses that future returns are not expected to be so strong, as the investment environment is now more challenging.When the pair were looking to a place to set up their new firm, it turned out to be a straightforward decision, helped by Mr Tafur’s knowledge of the Island through family ties. His wife Sarah is Bermudian.“Obviously there is a tax advantage in being here and a high quality of life,” Mr Tafur, a Spaniard, said. “Vis a vis other jurisdictions, Bermuda was far, far above the rest.”Bermuda proved to be far more attractive than alternatives such as Jersey and the British Virgin Islands, as the Island is a dynamic and flexible jurisdiction with a highly educated workforce and is geared up to be a financial centre, he said.“I’ve been coming here for a long time and I know that Bermuda likes to criticise itself a lot,” Mr Tafur said.“But the truth is that it’s a really easy place to do business and the process of establishing a company here was very smooth for us.“When you set up an asset management firm, you’re really looking for three things legal support, an accounting firm and a fund administrator.” They found all three, all of a high standard, and were “spoiled for choice” in selecting them, he said.“It’s very close to New York and not too far from London, arguably the world’s top financial centres. The climate is not too bad either.“We’re surprised that there aren’t many alternative investment managers based in Bermuda. We believe that in the future that will change.”Mr Tafur was at Morgan Mr Tafur was at Morgan Stanley for 15 years. The decision to set up an independent firm with Mr Ceron came about for a couple of reasons in particular.“The reality is that you can become a victim of your own success and you end up running 40 different funds or portfolios,” he said. “When you are managing so much, you don’t satisfy everybody and it’s contrary to the interests of investors,” he said. “Also after 15 years in one place, you get the desire to do something a bit more entrepreneurial.”Equilibria is based in XL House, in Bermudiana Road, Hamilton. It has a team of four on the Island, three of whom are Bermudians or spouses of Bermudians. The firm also has an office in Geneva, Switzerland, where another member of staff is based.Their hires include a former Morgan Stanley investment analyst, the former head of legal at Fidelity International, and a head of operations who was formerly with a renowned fund of hedge funds group.Mr Tafur said Equilibria’s investment philosophy was based on six tenets.l That markets are inefficient, meaning assets’ trading values do not reflect their fundamentals, creating opportunities to be exploited.l Taking a global view and having the flexibility to switch between asset classes to exploit opportunities.l Valuation is the most important thing - much time and effort is spent on analysing fundamentals.l Preservation of capital during downturns.l Long-term focus - while fundamental valuations remain attractive, stick with the investment, even if market valuations don’t catch up in the short-term.l Concentrate on the best ideas - currently the firm limits the fund to between 30 and 45 holdings.The fund targets 10 percent annual returns and its target clients are pension funds, funds and funds of funds and high net worth individuals, particularly from Europe and the US.Mr Tafur believes the outlook for the next two to three years is better for equities than for fixed-income investments. “On the equity side, companies have very solid balance sheets and some pretty good dividends and there is a corporate stability that was not there two years ago,” he said. “There are some large-cap companies like Apple, Bank of America and BP, at the cheapest they’ve been in the last 15 years.”However, he sees the prospects for making gains on the stock markets over the next two or three months as pretty poor.“The Greek debt situation is reaching boiling point,” Mr Tafur said. “There is a restructuring coming and when it happens what impact will it have on currencies and markets? That is my biggest fear over the next two months.”For more information, call Equilibria Capital Management on 295-2233 or contact Mr Tafur at daniel.tafur[AT]eqcapm.com