3A launches Asia-focused and opportunistic funds of hedge funds
Alternative Asset Advisors (3A), the hedge fund management division of Geneva-based banking group Syz & Co, has launched six new sub-funds of its USD1.3bn Luxembourg-domiciled umbrella fund, offering Asian and opportunistic fund of hedge fund strategies in US dollar, euro and Swiss franc versions.
The new funds are part of Alternative Capital Enhancement, an open-ended investment company (Sicav) structure that currently comprises 20 sub-funds representing various hedge fund strategies including multistrategy, arbitrage, long/short, macro and natural resources. The ACE Asia Fund and ACE Opportunity Fund, like other sub-funds, are authorised for distribution in Switzerland as so-called funds presenting special risks.
Through a diversified portfolio of Asian hedge funds, the ACE Asia Fund provides access to some of the world's most dynamic economies, including China and India but also countries in south-east Asia that have benefited from steeply rising demand across the continent. The surge in investment opportunities has prompted vigorous growth in the alternative investment industry in Asia, where some 1,200 hedge funds manage about USD150bn in assets.
The manager argues that as well as offering a source of diversification away from the North American and European markets, investing in this region via hedge funds is particularly effective because of the volatility of Asian markets. For investors seeking exposure to the region, the downside protection offered by absolute return strategies represents a distinct advantage.
The ACE Opportunity Fund aims to generate returns above the average yield of multistrategy funds, albeit accompanied by somewhat higher volatility, through a portfolio combining opportunistic hedge funds with managers focusing on what 3A believes are the most promising investment themes in the short- to medium-term. The fund is envisaged as a complement to an existing portfolio of hedge funds.
A more opportunistic investment strategy is justified, 3A says, by the fact that alternative strategies have become more cyclical than in the past, resulting in widening performance disparities between strategies. The annual return differential between the most successful and least successful strategies since 2001 has varied between 15 and 60 per cent, increasing markedly the importance of selecting winning strategies.
The ACE Opportunity Fund is currently invested in 17 hedge funds representing various distinct strategies: US economic slowdown (macro), rising default rate (credit), Russia/technology/gold (long/short equity), increased volatility in Asia (long volatility) and opportunistic managers.
Both new strategies are available in US dollar-, euro- and Swiss franc-denominated versions and in three share classes. Class A and B shares for private investors and discretionary asset managers require a minimum subscription of 1,000 and 10,000 dollars, euros or francs respectively, and carry a 1.5 per cent annual management fee, while Class C for institutional investors has a 5 million dollar, euro or franc minimum and a 1 per cent management fee. The performance fee for all three share classes is 7.5 per cent; all six sub-funds are open for subscription and redemption on a monthly basis.
As the alternative management division of Syz & Co, 3A manages several funds of hedge funds, including Altin, an investment company listed in Zurich and London, as well as Alternative Capital Enhancement and various alternative products specifically designed for institutional investors. The firm had total assets of more than USD4bn at the end of last year.
Syz & Co specialises in asset management through three interconnected area of activity, high-level private banking offered by Banque Syz & Co, the Oyster range of investment funds and 3A as the group's alternative investment unit. The group manages CHF31bn in assets and employs 320 staff at its Geneva headquarters and offices in Zurich, Lugano, Locarno, London, Luxembourg, Nassau, Salzburg, Milan, Rome and Hong Kong.
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