Fortune Group is planning to launch a principal protected note based on the strong performance of its Market Wizards Fund Plus fund of hedge funds.
London-based Fortune Group's flagship fund of funds, The Market Wizards Fund Plus, passed its second year anniversary with strong performance.
Fortune stated: "Wizards Plus has returned 21 of 24 winning months, with gains in each of the past 12 months, and only one month with a loss greater than 1%. Annualized volatility is well below 3%, half that of the HFR fund of funds index over the same period. Yet, despite, these very low risk characteristics, the fund still has returned 8% annualized net of all fees (adjusting first seven month returns for leverage facility which was not operative until fund's eight month)."
The diversified fund of hedge of hedge funds was launched by Fortune as a Dublin-listed vehicle, co-advised by the group's research arm Global Fund Analysis and Jack D. Schwager.
The fund leveraged off the reputation of Schwager, credited with unearthing some of the great names of the hedge fund industry over the last two decades. Schwager started running the Market Wizards Fund LLC in 1999 and joined Fortune Group in 2001 to grow the business on an institutional footing.
With over USD 150 million of invested assets, the program has been cloned in Luxembourg through the Argos SICAV, a range of fund of funds promoted by a Swiss private banking group.
Simon Hopkins, Fortune's CEO said: "Usually, the choice between diversification or concentration is considered mutually exclusive. There is, however, an interesting middle ground. Investors preferring the upside potential offered by a concentrated portfolio can increase their percentage of winning months and constrain their drawdown by allocating a minority of the portfolio to a diversified investment that has a high probability of positive return."
He said: "Allocating 15-30% of the portfolio to such a single diversified investment can provide the portfolio with a positive expected return in each month, while still not sacrificing the potential for well above index returns from a superior concentrated portfolio of single funds".
Fortune is now proposing to launch a principal protected note investing in early stage managers based on this premise. It will employ the Market Wizards Fund Plus for such a role.
Background Note: The Fortune Group is a London-based asset management company, regulated by the Financial Services Authority and the SEC. Founded in 1996, the company is focused on the alternative asset arena, and runs nine private label advisory mandates as well as Fortune's own fund of funds including the Market Wizards Fund Plus. All the funds are co-advised by its affiliate research company, Global Fund Analysis Ltd. Fortune actively seeds and sponsors a select number of early-stage hedge funds and has raised over USD 1 billion of assets in this capacity.
copyright hedgeweek 2003