HFR Asset Management (HFRAM) says it launched the first-ever emerging managers hedge fund of funds on a controlled infrastructure platform. The HFR emerging managers fund will initially comprise 21 funds, each with two years or less of tenure. Barclays Capital has an exclusive arrangement to offer structured products on the fund, which will be the first time principal protected notes have been issued on a dedicated emerging manager fund of funds.
BarCap has one of the largest and most active fund-linked derivatives units. It has constructed a range of structures including certificates, principal protected notes and open-ended structures, linked to the emerging managers fund of funds to meet investor appetite and the regulatory requirements of the various European countries.
HFRAM is setting up its emerging managers platform in direct response to evolving marketing conditions in hedge fund investing. Whilst encompassing higher risk, younger managers have frequently delivered better returns to hedge fund investors over recent years because of their ability to capitalise on niche investment opportunities and enter and exit portfolio positions without negative impact on the market. HFRAM will try to reduce exposure to the higher level of operational risk typically associated with younger funds by applying its industry benchmark risk management systems across every fund in its new emerging managers fund.
John Godden, managing director of HFRAM, comments: “The HFR Emerging Managers platform offers a significant complement to the existing HFR portfolio of fund of fund investment opportunities. The Emerging Managers Fund will combine highly motivated managers with the ability to deliver alpha together with the stringent and rigorous controls of HFR’s historic risk management systems. Barclays Capital has provided some very well costed and constructed structured products to enhance the proposition for clients.”
Antti Suhonen, head of fund-linked derivatives structuring at BarCap, adds: “Barclays Capital is committed to offering clients tools to access a wide selection of opportunities within the alternative investment market. The manner in which HFR have built the Emerging Manager Fund incorporating all of their experience in risk control has allowed us to bring our full range of structures into play. We are able to offer clients products with very efficient characteristics due to the level of infrastructure, information and liquidity offered by HFR.”