London-based Coronation Fund Managers has concluded a distribution agreement with the Switzerland-based hedge fund provider Absolute Plus Zurich AG.
According to the agreement Absolute Plus will work alongside Coronation's existing distribution in Switzerland as well as in Benelux to promote Coronation's three sector-based funds of hedge funds to mainly institutional investors.
Coronation, a funds of hedge funds manager, has three specialist funds of hedge funds sector portfolios, developed to meet specific risk and return profiles of clients, as well as multi-sector offerings based on the sector funds. Coronation's Global Equity, Relative Value and Global Macro funds distinguish themselves by real track records of 4 to 8 years, with strong and consistent performance and a highly experienced management team, based in London, who have on average nearly 20 years investment experience including single manager hedge funds with an average of over 7 years experience managing large funds of hedge funds.
Christoffer Dahlberg, Director of Absolute Plus, said: "it gives us great pleasure to work with Coronation in building the Coronation brand and increasing sales in Switzerland and Benelux. The Coronation funds add value to our current fund range and fulfill our demands on working with experienced managers exhibiting solid track records."
Andre du Plessis, CEO at Coronation (see previous Hedgeweek Interview), said: "As an institutional fund manager we have been investing the assets of our pension fund clients in funds of hedge funds for over eight years. We believe our arrangement with Absolute Plus will introduce us to investors interested in this approach. As expectations for equity and fixed income returns have been falling institutional and private investors alike are recognising that the traditional risk and return models need to be reassessed. Investors are focusing on more efficient asset allocation linked to risk budgeting in order to maximise alpha generating opportunities per unit of capital. We believe that an appropriate level of scarce capital should be allocated to actively managed, absolute return orientated hedge fund strategies which can consistently deliver absolute-plus returns but with high levels of alpha and at a given level of risk."
Absolute Plus Zurich AG is a Zurich-based provider of externally managed single- and multi-manager hedge fund solutions to mainly institutional investors in Switzerland, Benelux and the Nordic countries. Absolute Plus is part of the Vienna Portfolio Management group, founded in 1989 and active within the absolute return sector for over ten years.
Founded in 1993, Coronation Fund Managers is an independent, owner-managed institutional fund management company. It has assets under management of USD 10 billion, of which USD 1.2 billion is in funds of hedge funds. Coronation employs 135 people with 24 people in the fund of hedge funds business in London. Coronation has been managing funds of hedge funds since 1996 and continues to expand this business.
Coronation's three key products are:
* The Coronation Relative Value Fund, launched in January 2000, a USD 200 million relative value and event driven arbitrage fund of hedge funds. Since inception the fund has returned an annualised 7% with a Sharpe ratio close to 2. Year to date performance has been over 3.0%, in difficult market conditions. The portfolio is highly diversified across a range of low risk strategies and styles and currently comprises 25 hedge funds. The fund is suited to investors seeking a low risk investment with consistent and stable capital growth at a rate significantly in excess of "risk free" returns across all market conditions. Target annualised returns are LIBOR +4-6%, with an annualised volatility of 2-4% over a full business cycle.
* The Coronation Global Equity Fund launched in August 1996. The fund invests in long/short equity hedge fund strategies covering the US, European and Far East markets. The primary objective is to produce absolute returns and to outperform the MSCI World Index with lower volatility. The fund is focused across some 20 hedge fund managers, and is well diversified across manager investment styles and exposure to market direction. Targeted annualized returns are LIBOR + 7-10%, with an annualised volatility of 6-9% over a full business cycle.
* The Coronation Global Macro Fund launched in November 2000 and investing in global macro and managed futures hedge fund managers. They actively manage investment opportunities in all global markets and in a wide range of financial instruments, including fixed income securities, equities, currencies and commodities. The fund managers employ a variety of investment techniques, including discretionary as well as systematic styles, taking advantage of either directional and non-directional opportunities. Targeted annualized returns are LIBOR + 7-10%, with an annualised volatility of 5-8% over a full business cycle.