Finles Capital Management is launching the first index tracker focused exclusively on Dutch-based hedge funds.
The initiative is aimed at attracting more institutional investments in Dutch hedge funds and putting the Netherlands on the map as an international centre for the sector.
Rob van Kuijk, chief executive of Finles Capital Management, says: “A typical pension fund in the Netherlands lost one per cent or more on its equity portfolio during the last ten years, while in contrast, a diversified hedge fund investor would have achieved a return of five per cent during the same period with less than half the risk.
“After the UK, the Netherlands is the largest institutional investment market in Europe. We need to bring the hedge funds management talent that we have available locally together with this capital in order to establish a world-class industry. Hedge funds based in the Netherlands have proved that they can match-up to foreign competition and achieve very good investment returns. That’s the reason we’re launching this initiative.”
The Dutch Hedge Fund Tracker is a fund of funds and tracks at the start the performance of a maximum of 25 hedge fund managers in the Netherlands, based on the new Dutch Hedge Fund Index. This new investible index is derived from the Finles/IEX Dutch Hedge Fund Index, which started with 17 hedge funds on 1 January 2009 and had 27 funds by January 2010. Last year, the index’s total return was 11 per cent.
The composite hedge funds are classified on four criteria: size, liquidity, costs and correlation. Based on these criteria, a maximum of 25 funds with the best scores were given a place in the index, with a weighting that ranged from seven per cent for numbers one to five to one per cent for numbers 21 to 25. No more than 20 per cent of the Dutch Hedge Fund Tracker can be in less liquid funds.
Using these rankings an index is created, which offers a diverse range of investment strategies. The largest weightings in the index are currently long/short equity (29 per cent), global macro (11 per cent) and multi-strategy (ten per cent).
