Finles Capital Management, the Dutch funds of funds manager, says the hedge fund strategy it launched late last year to capture investment opportunities arising from the credit crisis is outperforming all its peers in the Netherlands.
The Finles Alternative Bond Fund has produced a positive net investment return of 4.4 per cent this year up to mid-November, compared with a decline of around 20 per cent for Hedge Fund Research's benchmark HFRX Global Hedge Fund Index so far in 2008.
The fund manager claims the fund is also outperforming all other managers offering similar hedge fund strategies in the Dutch market.
Finles chief executive Rob van Kuijk says: 'We saw that banks were leaving attractive niche opportunities for hedge funds to invest in smaller deals in asset-backed lending and distressed debt.
'This was a solid business before the credit crisis. Since the summer of 2007 business has exploded as the global financial crisis has deepened and the strategy can offer solid returns for low volatility, as long as you pick managers who ensure they have high levels of collateral.'
The fund was launched in November 2007 and currently invests in 13 underlying hedge fund managers, from a targeted pool of around 40, with the largest geographical weighting in the US (43 per cent of the portfolio) and the biggest collateral weighting in the real estate sector (36 per cent).
The hedge fund managers predominantly lend against assets such as accounts receivables or real estate, and the loan-to-value ratio extended has on average dropped to 60 per cent from 70 per cent a year ago.
'Perhaps contrary to popular perceptions, we also see potential for rising interest in hedge fund investing as hedge funds have achieved much more limited losses than the recent carnage in long-only fixed income and equity funds,' van Kuijk adds.