Collins Stewart Portfolio Management (CSPM) is to launch a Guernsey-registered, closed-ended fund of hedge funds, with no annual management fee.
The fund is to be listed on both AIM and the Channel Islands Stock Exchange (CISX) in October.
Significantly, this will be the first London traded fund that invests in third party hedge funds not to levy an annual management fee. In order to ensure a close alignment of interests between the managers and shareholders of the fund, performance fees only will be charged.
The investment objective, strategy and policy of the Collins Stewart Absolute Return Fund Limited (CSARF) will mirror that of the successful Collins Stewart Absolute Return Plus Fund (CSARP), which is a multi-manager and multi-strategy, Guernsey registered open-ended fund.
From 1 November 2002 to 31 July 2006, CSARP delivered an annualised return of 11.51% (source: Collins Stewart) and has featured in the top decile ranking in the InvestHedge Fund of Hedge Funds peer group over the period since CSPM assumed sole management. (source: Investhedge Database).
CSARF will aim to deliver returns, in excess of Sterling three month LIBOR plus 6% per annum (net of expenses) over three year rolling periods*, with an absolute return focus and the potential to generate positive returns in rising, falling and flat markets through investing in actively managed portfolio of hedge funds. This will be achieved by a dynamic and active approach to global asset allocation, manager selection and portfolio construction. It is intended that the portfolio will consist of between 30 and 40 individual hedge funds.
Seeking to raise up to GBP 50m, the target client base for the fund will include pension funds and other institutions as well as UK investment managers who previously may have wished to access this important asset class but were unable to do so because of regulatory or tax constraints. However, it is also anticipated that there will be demand from offshore investors who may be attracted by this fund's closed-ended structure.
CSARF's lead manager will be Kevin Boscher who has 25 years' experience in the asset management industry with particular expertise in the areas of asset allocation and multi-manager selection. Kevin has been investing in hedge funds for over 15 years and joined Collins Stewart in May 1996 as a director with responsibility for establishing a fund of funds business. He also has responsibility for leading the team on CSARP.
'We have been investing in hedge funds for many years at Collins Stewart and have built up an excellent track record in our Guernsey-based fund, the Absolute Return Plus Fund. We are keen to open up this expertise to a wider audience and to grow our hedge fund client base,' says Boscher. 'We're also fully aware of the concerns which have been recently highlighted regarding various Fund of Hedge Funds' performance and fees. CSARF has been designed to align our remuneration interests with those of our investors by offering a performance fee only structure.'
CSPM currently manages approx USD 400m invested in hedge funds for clients of the Collins Stewart Group and has access to an extensive network of hedge fund and long-only contacts. The team currently closely monitors some 450 funds.