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Portfolio > Alternative Investments > Hedge Funds

CMA Announces Fifth Structured Hedge Fund; Readies

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GENEVA (–Capital Management Advisors Group has launched a 15-year capital guaranteed product linked to a hedge fund of funds that is being sold to European insurance companies.

The note has already gathered 135 million euros in assets (US$145 million) and is the fifth structured product linked to a hedge fund of funds managed by CMA. The firm is expecting to grow to US$1 billion in assets under management from its current US$650 million in institutional and private client assets.

“Here (in Europe) investors still have very low exposure to funds of funds,” said Sabby Mionis, a partner of the Luxembourg-based group. “This (fund) is going to grow significantly I think.”

The new 15-year guaranteed note is linked to the Berklay Global Fund, which is a multi-strategy hedge fund of funds advised by CMA. The notes are structured to deliver an annual yield of 2.4%, and a guarantee is placed on the initial capital investment via Societe Generale, which is issuing the note.

Demand from institutional investors for an offering that combines exposure to hedge funds with capital protection and a significant income component is what lead to the creation of the 15-year note, according to officials.

The fund’s investment objective is low volatility capital appreciation, which is in part achieved via diversification into between 30 and 35 funds and specific monthly liquidity restrictions. This launch comes on the heels of the launch of a structured fund not linked to CMA’s Global Balanced Fund late last year Previous HedgeWorld Story. That fund has raised 50 million euros so far.

Mr. Mionis said the firm plans to launch an innovative leveraged fund by the beginning of summer that could grow to almost US$200 million in both euro- and dollar-denominated tranches. This fund would take a different approach than its predecessor that was launched last month.

CMA’s Bermuda subsidiary is set to manage the Pantheon Funds Ltd., a Cayman Islands-registered hedge fund of funds with 65 million euro in assets. It’s working with the fund derivatives group of BNP Paribas SA, Paris, to develop a series of structured products tied to the Pantheon Fund. The first such products, already launched, is a five-year 22.75 million euro note, which was sold to European institutional investors.

At the same time, CMA is preparing for growth and will open a New York office in another month. Two professionals will be opening the office, focusing on due diligence of U.S. hedge fund managers. As the U.S. office establishes its footing, the due diligence work will be split between the Geneva office and the New York offices where European and U.S. hedge fund and research would be handled respectively, Mr. Mionis said.

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