Hedge funds have been knocked around in recent times, but there’s nothing like a return of 13.2 per cent after fees to make someone sit up and pay attention.
That is the return of the Winton Global Alpha fund, the declared winner in the Alternative Investments category in this year’s Money Management/Lonsec Fund Manager of the Year awards.
The fund, offered exclusively by Macquarie Professional Series, is a managed futures hedge fund that uses a statistical research approach to identify trends in financial markets.
The fund has more than 100 staff dedicated to finding those trends. They search only for high quality PhD graduates and post doctorates to fill out their staff, making it a highly qualified team of analysts.
“Really for us, the key was their investment in research and their dedication to research,” said Adrian Stewart, head of distribution at Macquarie Professional Series.
Winton’s team leader, David Harding, has been in the CTA sector for 27 years, giving him a unique depth of knowledge around the development of the sector. Lonsec pointed to Harding’s experience as the reason for the fund’s success, saying it has competitive advantages with Harding’s quality and track record.
A dedication to risk management is essential in the hedge fund industry, especially for this fund, which Lonsec labels highly volatile.
Despite its volatile nature, the fund still has the lowest volatility target across the CTA peer group, Stewart said.
“We can still deliver a strong track record in performance by taking less risk, which is something of an achievement,” he said.
The fund has produced more than 6 per cent in excess returns since it first started. Launched in May 2007, it now has more than $20 billion in funds under management, making it the 14th largest hedge fund in the world.
They are well diversified, sitting across 100 different markets at any one time, including share indices, bonds, interest rates, currencies and commodities.
MAN AHL Alpha Fund, runner-up in the category, takes a different approach to their analysis.
The fund doesn’t rely solely on key analysts for its returns, but has developed a computerised investment program that can sample more than 4,000 market prices a day.
The program was built with the help of more than 110 MAN personnel who are dedicated to developing the program, improving its execution of trading, and coming up with new strategies.
According to Lonsec, 34 personnel are devoted to developing new trading signals and models, while 27 are devoted to developing its trading systems.
With this large number of experts working on the fund, it is clear why Lonsec said the high level and quality of intellectual resources underpinned the alpha fund’s prime rating.
Hersh Gandhi, MAN Investments director, said the fund’s strong returns in bear markets and highly diversified portfolio made it successful in the hedge fund space.
“It’s done over 8 per cent in the last 12 months. That compares pretty favourably to Australian stocks which are just under 5 per cent.”
A managed futures fund like AHL appealed to investors because they need something that provided a low correlation to the market and strong returns when traditional assets were struggling, Gandhi said.
The fund has been around for two-and-a-half years.
AQR Delta Fund, run by AQR Capital Management, was the third finalist in the category. The fund relies on its diversified portfolio of multiple hedge fund strategies to provide high risk-adjusted returns in excess of the UBS Bank Bill Index. The fund utilises a bottom-up dynamic investment process, and relies on more than nine different strategies.
The fund’s net returns to investors over 12 months to December last year were 9.6 per cent.
