The key to HFA Asset Management’s win in this year’s Hedge Fund of Funds (Alternative Assets) category was its Diversified Investment Fund “delivering on its purpose of generating absolute returns”, according to managing director Oscar Martinis.
“Our fund has delivered capital preservation through all market conditions in 2007, and delivered an absolute return to investors,” Martinis said.
The fund returned 9.38 per cent net in calendar year 2007, he said, compared to “our absolute return objectives” on the portfolio of 8 to 12 per cent per annum on a rolling three-year basis.
Another characteristic of the fund’s performance during the year was delivering “equity-like returns with interest-like levels of volatility”, he said.
“Our fund volatility since inception stands at 3.32, which is very similar in volatility profile to the UBS Composite Bond Index (2.7 over the period), while fixed interest returns over the 12 months were 3.5 per cent.”
The fund, which Martinis said “generally runs over 50 underlying managers, and is driven over 11 different investment strategies, is also characterised in the fund-of-fund space by a “non directional” portfolio.
“We run a very low equity credit spread beta and fixed interest beta in our portfolio, which enables us to deliver a truly independent return stream from pretty much anything else out there in the market.”
HFA beat two other finalists, BT for its Global Return Fund and Goldman Sachs JBWere for its Multi-Strategy Fund, to take out the category.
BT Global Return Fund portfolio manager Greg Revitt said 2007 was one of the fund’s “best years for four years”, returning about 9.5 per cent after fees, notwithstanding the volatility from June onwards.
“We are particularly satisfied with the fund’s performance from June last year to March this year in an extremely stressed environment.
A key to the performance was “an underlying investment exposure that is quite diversified, with typically between 55 and 60 managers in the fund, each exposed to about 1.5 per cent to 1.6 per cent, and to a maximum of 4 per cent”.
“Slightly less than half of the fund is distributed among the top 20 managers, ensuring that the risk focus is to select skilled managers that can add value in their own right, rather than exploiting any market direction,” he said.
The fund’s investment program is managed by Grosvenor Capital Management.
A spokesperson for Goldman Sachs JBWere’s Multi-Strategy Fund said the fund had “performed well in challenging conditions throughout the year in the alternative asset space”.
“Our view is that fund of funds continue to play an important role in overall portfolio construction, offering the opportunity to diversify and manage risk for certain clients.
“We have observed alternative assets to be an area of growing interest for the Australian adviser community, which is in line with the trend throughout the international marketplace.”
