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Portfolio > Alternative Investments > Hedge Funds

Market-Neutral Fund of Funds

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LONDON (–Global Investment Advisors Ltd. launched a new fund of funds on July 8 that will invest its capital with managers that comprise the market-neutral component of the CSFB/Tremont* Hedge Fund Index.

Underlying strategies tapped by the fund will all fall under the market-neutral umbrella but will include a mix of long/short equity, fixed-income, and arbitrage. Up to 20 funds from the sub-index might be included, with an emphasis on larger names.

Because funds are chosen based on their inclusion in the CSFB/Tremont Hedge Fund Market-neutral sub-index, Global Investment Advisors Ltd. describes the fund as a “passive strategy.”

Using funds from the market-neutral component of the alternative benchmark is also significant because it means that investors will have transparency when it comes to the composition of the multi-manager portfolio. Weightings for individual managers will also be disclosed to investors.

The GAIM Market Neutral fund is available in two share-classes, one U.S. dollar-denominated and the other in euros.

The minimum investment is US$100,000 or 100,000 euro. The fund is targeted at institutional investors who want a diversified blend of market-neutral strategies in a lower volatility format.

Principal-protected access to the market-neutral fund of funds is also being offered through a structured note issuance put together in conjunction with Lehman Brothers. Assets raised for the notes will be linked to the performance of GAIM Market Neutral. It was not immediately clear how much Global Investment Advisors was looking to raise for the new market-neutral fund or whether additional tranches were planned.

The equity market-neutral component of the CSFB/Tremont Hedge Fund Index was up 2.8% year-to-date through May. The sub-index faired a bit better then the wider benchmark, which up 2.2% over the same period. That’s a strong showing as compared with the Standard & Poor’s 500 stock index, which plunged nearly 7.1% during the first five months of 2002.

The market-neutral vehicle isn’t the first foray by into the world of fund of funds by the firm. Less than a year ago, Global Investment Advisors launched another fund of funds, the GAIM Hedge Fund Ltd, (Previous HedgeWorld Story) which also tapped managers from the CSFB/Tremont Hedge Fund Index.

Global Investment Advisors Ltd. is a subsidiary of Integrated Asset Management. GIA’s parent late last year formed a joint venture company with JD Farrods Securities (Previous HedgeWorld Story) to distribute Global Investment Advisors Ltd.’s hedge funds to European investors.


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