EUROPE - Dutch firm Robeco is expecting to lure more European pension funds, as well as private banks, following a positive performance from its Robeco Absolute Return hedge fund of funds (RAR).
Capital appreciation and significant inflows have lifted the Luxembourg domiciled fund to above e100m. RAR is euro-denominated and invests in 19 different hedge funds worldwide. The fund is open-ended with a target return is 10-12% per annum.
The fund invests mainly in convertible arbitrage-, equity market neutral- and event driven strategies, with some exposure to fixed-income arbitrage, global- macro and long/short equity.
Since its launch in June 2002, the fund (Class B Shares) gained 5.3%, beating the CSFB/Tremont Hedge Fund Index (+5.1%), the HFRI Fund Weighted Composite Index (-0.1%) and the MSCI World Index in EUR (28.3%). Class A shares gained 5.6% since inception in July 2002.
Bob Galesloot, head of hedge funds and fund manager at Robeco Alternative Investments in Rotterdam, attributes the growth in assets to “the fund's ability to preserve capital and produce positive returns in a very difficult market environment.
“Robeco Absolute Return is very attractive from a viewpoint of riskdiversification within a portfolio,” he said.
“The value development of a well-diversified hedge fund portfolio has shown little correlation with that of traditional asset classes such as bonds and listed equities in the past. An investment in Robeco Absolute Return therefore allows one to improve the risk/return ration of the total portfolio.”
Minimum investment levels are e1000 (class A) and e2,500,000 (class B).
Galesloot, who declined to name any institutional investors, added: So far, every investor has made a positive return on his or her investment in the fund, and, with the exception of the outflow of initial seed capital, no investors have had any of their investments redeemed.
Another hedge fund manager who believes that there is “growing demand” for the asset class is Old Mutual, who have launched Bright Capital, a new fund-of-hedge funds manager in the UK.
Currently, only 3% of UK-based schemes invest in hedge funds, according to US consultant Greenwich Associates.
But Old Mutual believes that figure will increase if managers offer greater transparency and investment monitoring.
Bright Capital has developed a “transparent risk-controlled process” – which includes constant monitoring of underlying portfolios to prevent style drift and direct control of assets through segregated managed accounts.
Additionally, the firm will vet hedge fund managers in each stage of the manager selection to ensure that there are no conflicts of interest.
Old Mutual deputy chairman and chief executive officer Hasan Askari said: “We believe that fund-of-hedge funds are a key growth area of asset management, as institutional investors look for new ways to generate returns.
“We have developed a distinctive offering based on a rigourous risk control process.”
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