RMF Investment Management has completed a EUR 235 million collateralized fund obligation (CFO) that offers efficient leveraged access to the RMF Four Seasons fund of hedge funds portfolio.
This innovative product-type, pioneered by Man Investments, was launched in partnership with French investment bank Ixis and is the first of its kind from RMF.
The RMF Four Seasons CFO issued five tranches of debt, and one of equity, at record low spreads for a CFO. The proceeds of this issue were invested in shares of RMF Four Seasons.
This allowed investors to either gain fives times leveraged exposure to the performance of the Four Seasons portfolio or, to buy rated, attractively priced bonds secured by a fund of hedge funds portfolio.
RMF Four Seasons is a highly diversified fund of hedge funds that targets consistent, low volatility returns by allocating to approximately 200 leading hedge funds. As at 31 July 2006, the product had generated an annualised return of 7.16% since its inception in August 1999, for a volatility of 3.64%.
Sven Lidén, a member of RMF's management committee, said: 'This CFO deal is a further example of the strong synergies between Man Investments and RMF, combining Man's leadership in product structuring and transaction management with a highly diversified RMF portfolio. RMF's process-driven and disciplined approach to investment allows us to target, and achieve, the low-risk, repeatable returns necessary to structure such a product.'
Following the success of this latest product innovation, RMF is now working on a second CFO offering.