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Portfolio > Alternative Investments

Citigroup Alternative Investments Creates Fund of

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NEW YORK (–Citigroup Alternative Investments is putting together a new fund of funds, which will allow high-net-worth and institutional investors to choose between two series of shares depending on their appetites for risk.

The initial closing date for the two series is expected to be Dec. 2, according to a filing with the U.S. Securities and Exchange Commission last week. It was not clear how much the firm hoped to raise for the strategy or whether additional offerings might follow.

Series-A shares of the Citigroup Alternative Investments Multi-Adviser Hedge Fund Portfolios LLC will seek T-Bill returns, plus 6% over a three-to-five year horizon with a standard deviation of less than 5.5%. Series B shares will seek T-Bill rates plus 8% over the same horizon with a standard deviation of less than 7.5%, according to SEC documents.

Included in the investment mix will be discretionary strategies that make directional bets based on anticipated economic or technical trends and valuation inefficiencies. Underlying funds may include global macro and long/short equity funds. Other styles may include equity arbitrage strategies, statistical arbitrage, equity market neutral, and fixed-income arbitrage. Merger arb, convertible arb and distressed-securities funds also may be included.

Both series will aim to limit exposure to any single fund at a maximum of 20% of net asset value to reduce risk and potential portfolio volatility.

The managing member of the limited liability company is Delaware-incorporated AMCAR Partners Inc., while Citigroup Alternative Investments LLC, a wholly owned subsidiary of Citigroup, is the adviser.

Clifford De Souza will be senior investment officer for the fund of funds. Nicholas Demonico, who left his portfolio management post at CDC Investment earlier this year, will oversee asset allocations to arbitrage, event driven and relative value strategies. As a managing director, David Biase will be involved in selecting discretionary and global macro funds for the multi-manager vehicle.

The management fee for Series-A investors will be 2% annually, paid in monthly increments and 2.25% for Series-B, according to SEC filings. It was not immediately clear what the performance fee would be. Individual units of the private offering will be available in US$1,000 block sizes for qualified investors, according to SEC documents.


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