Frontier Capital Management has launched the FrontEdge Managed Futures Fund.
The fund is designed to offer investors an efficient method of accessing managed futures, and is the second alternative investment fund established by Frontier, following FrontEdge Global Hedge Fund which launched in 2009.
The managed futures asset class is currently experiencing increased interest, as its defensive properties were once again proven in the most recent bear market, with industry returns of around 17 per cent in 2008.
Frontier says the inclusion of managed futures in either traditional equity/bond or more diversified portfolios has been shown to improve risk-adjusted returns, and is one of the most liquid absolute return strategies.
The fund targets risk-adjusted returns in excess of the average return for the managed futures industry. It combines individual funds, managed accounts and synthetic replication.
The fund will be launched with initial investments of USD40m, expected to rise to USD60m by the end of the year.
Michael Azlen, founder and executive chairman at Frontier Capital Management, says: “Frontier’s approach to investing is highly evidence-based and the abundant evidence supporting the case for managed futures has always been compelling. Our multi-asset funds have always included an allocation to managed futures, due to its high levels of liquidity and its ability to provide diversification of risk while enhancing portfolio returns. For investors constructing their own asset allocation, however, it is not always easy to access the benefits of this asset class: as with any investment there is the need for sufficient diversification and constructing a well-spread portfolio of managed futures funds is both time-intensive and requires expertise. We believe that we have created a superior fund that could be used as a ‘one-stop’ managed futures allocation within a diversified portfolio.”
Marc-Phillipe Davies, head of investments, is the co-manager on the fund. The lead portfolio manager is Alex Gaitan.
The fund will be available to external investors from 1 December.