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Focus Group Markets Distressed Funds of Funds

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HAMILTON, Bermuda (–Focus Group’s latest fund of funds offering is a strategy that hopes to benefit from market distress and corporate bankruptcies in a market that seems to be full of tales of woe.

The Focus Recovery Fund was launched on May 1, but is just now being marketed by Focus as a complement to its existing clients portfolios. The strategy was one that its clients have been asking for and initially is invested in six managers that focus on distressed and high-yield alternative investment funds in the United States and Europe, said Eugenio Verzili, managing director at Focus.

Special situations and capital structure arbitrage funds will also be included in the fund of funds. According to Focus, the number of companies filing for bankruptcy in 2001 was dramatically higher than ever before, with 255 publicly traded companies filing for bankruptcy. Comparing that figure to the last bankruptcy wave in 1991 that yielded only 123 filings, the market seems to be ripe for event-driven managers.

The offshore fund-of-funds portfolio will remain diversified among managers within each sub-strategy and will ultimately invest in between 10 to 15 managers and limit the target allocation to 10% per manager. The fund’s return objectives are 6% to 10% above LIBOR. The investment minimum is set at US$500,000 for the Bermuda-domiciled fund.

This fund is one of 20 funds of funds Focus Group offers, some of which are private label funds. “We want to stick to strategies that can offer the transparency we need,” said Mr. Verzili. These types of strategies are long/short equity, convertible arbitrage, merger arbitrage and now event driven.

The firm’s other recent offering in Canada alongside Montrusco Bolton mixes these strategies to form an absolute return fund of funds. Focus Group, which now has US$1 billion in fund assets, hopes to total US$5 billion in assets in five years.