Following the successful launch of two hedge fund ETFs in the US market, iM Global Partner has brought an absolute return strategy developed by Dynamic Beta investments (DBi) to European investors via the OYSTER Range.
DBi has been selected as the sole sub-advisor to manage the OYSTER Stable Return SICAV Fund (the Fund). The UCITS-compliant Fund is now positioned as an all-weather strategy focused on delivering stable hedge fund returns to institutional and retail investors with competitive fees, daily liquidity, and transparency.
The Fund stands to benefit from DBi’s impressive decade-plus track-record of successfully replicating diversified portfolios of leading hedge funds using only liquid exchange-traded instruments. As a result, the Fund will be more liquid, transparent and attractively priced than a traditional hedge fund. DBi’s proprietary replication process seeks to outperform institutional-quality hedge funds while mitigating three key investment risks: market structure (illiquidity, trade crowding, counterparty); concentration (single fund, industry, geography); and human biases (selection bias and gambler’s fallacy).
DBi has been an affiliated partner of iM Global Partner since 2018. Founded in 2012 by Andrew Beer and Mathias Mamou-Mani, Dynamic Beta Investments is a New-York-based (NY, USA) innovator in the liquid alternatives space with one of the longest live track-records in the hedge fund replication arena.
The Fund is co-managed by Beer and Mamou-Mani. With respectively 25 and 13 years of experience in asset management, they have worked together since 2008.
The fund harnesses DBi’s time-tested approach by combining two complementary DBi replication strategies: DBi’s Equity Hedge Low Volatility and Managed Futures with active positions only in highly liquid futures contracts. There are no illiquid assets, single stock, bond positions or OTC derivatives. In addition, DBi employs a risk mitigation overlay to enable the Fund to target a long-term volatility of 5 per cent.
DBi has managed the core strategies since 2012 and 2015, respectively, and the combined product follows iMGP’s launch of strategy-specific ETFs in the US in 2019. DBi’s Equity Hedge Low Volatility leverages the talent and resources of some of the world’s most sophisticated equity long/short hedge funds in order to deliver equity-like returns with lower risk over time.
DBi’s Managed Futures strategy, a proven diversifier with almost no correlation to equities, seeks to provide capital protection during periods of market stress. Unlike many replication products, DBi seeks to replicate pre-fee returns and hence pass more alpha to investors. As of November 2020, DBi’s Equity Hedge composite has outperformed the HFRX Equity Hedge Index by 5 per cent per annum since its inception while the DBi Managed Futures one has outperformed the SG CTA Index at an annual rate of 4.7 per cent since its inception, both with a similar level of volatility. Both strategies have offered strong downside protection in times of rising uncertainties in equity markets.
Philippe Uzan, CIO Asset Management of iM Global Partner, says: “This strategy attests to our ability to deliver innovative strategies and outstanding managers with proven track records. In this case, DBi is perhaps the only liquid alternative firm to have consistently outperformed hedge funds over time by pioneering the concept of fee disintermediation and alpha generation.”
Andrew Beer, Managing Member of DBi,:adds: “For more than a decade, Mathias and I have been singularly focused on how to outperform leading hedge funds with less downside risk, equitable fees and daily liquidity. We believe that hedge fund investors deserve more alpha and we are fortunate to have partners who share our vision.”
