3A launches leveraged fund of hedge funds

Developed in response to growing demand for alternative products with higher return profiles, the open ended 3A Windrider Fund aims to generate double-digit performance through the additional use of leverage on a broadly diversified portfolio of hedge funds.

The 3A Windrider portfolio is invested among 40 hedge fund managers spread across a number of styles and sub-styles and geographical regions.

Leverage will be applied in a flexible and dynamic manner and will vary between one and three times the invested equity.

Risk control will be managed through a broad diversification policy, the active management of leverage and through 3A’s due diligence process on the underlying hedge fund managers. 3A stated that simulations based on the projected portfolio have shown that the rise in volatility is moderate and largely compensated by the increase in returns. Investor risk is limited to the invested equity.

Tony Morrongiello, CEO of 3A – Alternative Asset Advisors, said: "The alternative investment market is evolving rapidly and to meet these changes, over the last couple of years, 3A has significantly broadened its product range. Initially, investors wanted exposure to hedge funds as an asset class and a plain vanilla multi-strategy fund of hedge funds was and still remains for many investors the favoured route."

He continued: " However, increasing interest and knowledge about hedge funds has seen the development of more specialised vehicles. An example are single-strategy funds of hedge funds, which allow investors to decide their own allocation between a number of alternative investment styles, which 3A has realised under its ACE Alternative Capital Enhancement umbrella fund in Luxembourg. The 3A  Gennaker Fund launched in 2002, which invests in smaller and more nimble hedge fund managers is a
further example of product specialisation. The 3A Windrider fund goes even further in this direction by giving investors the option to benefit from the use of leverage to increase returns, whilst still benefiting from the due diligence and track record established by 3A."

Morrongiello added: "The 3A Windrider fund has been designed for sophisticated investors as a complement to a diversified hedge fund portfolio and to meet the demands of clients and new investors seeking higher returns through the use of leverage. The 3A Windrider Fund will benefit from greater diversification across styles and managers compared to some fund of hedge funds which 3A manages, and will tend to be invested in established managers with longer track records."

The 3A Windrider Fund is incorporated in the Cayman Islands and is available both in USD and EUR. The fund is open for subscriptions on a monthly basis, with quarterly redemptions.
Minimum investment is USD/EUR 500,000.

The administrator is Citco Fund Services (Europe) B.V. and the custodian is SYZ & CO Bank & Trust Ltd. in Nassau. Investment management fees are 1.5% per annum and performance fees are set at 15%.

Background Note: 3A – Alternative Asset Advisors is one of Europe’s largest alternative investment management groups and is part of the SYZ & CO Group, the Swiss banking group. 3A is also the investment manager for ALTIN, the USD $225m closed-end
fund of hedge funds listed on the London and Zurich stock exchanges. 3A manages approximately USD 1 bn in alternative investments.

Established in Geneva in 1995 by Eric Syz, Alfredo Piacentini, and Paolo Luban, SYZ & CO has become one of the fastest growing and dynamic asset management groups in Switzerland. Today, with a staff of 140, the SYZ & CO Group has offices in Geneva, Locarno, Lugano, Zurich, Nassau, Luxembourg, London, Salzburg and Milan. The SYZ & CO group manages over USD 4.8 bn in client assets. SYZ & CO is sponsor to the ACE Alternative Capital Enhancement, a USD 225m SICAV fund of hedge funds registered in Luxembourg.

Copyright Hedgeweek 2003