Optimal Investment Services is launching two new funds of hedge funds.

Optimal Investment Services is launching two new funds of hedge funds under the new regulatory regime in Spain through its registered Spanish affiliate, Optimal Alternative Investments. Targeted mainly for private banking clients, the funds, Optimal Global Strategy and Optimal Arbitrage Plus, will be sold through various networks of the Santander Group to which Optimal is affiliated, as well as to the open market. The Optimal Global Strategy product, which was launched on 1 May, is a monthly liquidity fund with a multi-strategy profile. It invests in various hedge funds strategies producing a well diversified portfolio. Optimal Arbitrage Plus Fund, to be launched on 1 July, has a slightly different approach. It has quarterly liquidity and invests the bulk of its capital, up to 80 per cent, into relative value/ arbitrage strategies. The rest of the capital is invested into global macro strategies and equity long/short. Thus, the idea is to create a low volatility arbitrage fund complemented with a more directional stimulator, says Optimal. For both funds, Optimal has selected managers who are committed to produce, in absolute returns, a vehicle which is uncorrelated to traditional asset classes. It aims to produce constant returns irrespective of the market directions. The investment process is thorough and replicable based on quantitative and qualitative parameters, according to the company. Optimal conducts constant reviews of the managers, and doesn’t rely on past performance as a guide for their selection. Optimal’s approach is a combination of top-down and bottom-up manager selection, but most of the top-down market directionality is delegated to the managers. Manuel Echeverría, Optimal’s Geneva-based chief executive officer, told WealthBriefing that the impetus behind the Optimal funds was to take away from clients the burden of having to choose entry and exit points. “Lots of market participants sell at the bottom when the market is just about to recover so they don’t actually get the performance associated with a product, and it’s very difficult for them to get back in after this,” he said. Whilst these funds are new launches, Optimal has managed similar funds since 1992 thus having the added benefit of over 15 years’ experience in these strategies. And ninety per cent of months over this time have performed positively. Optimal avoids highly leveraged strategies and illiquid sectors with these products. It is a philosophy that is guiding global Optimal growth, according to Mr Echeverría. The company is hiring for new offices in Singapore and Dubai to complement those in New York, London, Madrid and Geneva. By the end of the year the company expects to be employing 60-70 people. Sixty per cent of its $9 billion in assets are managed for private clients. “We put a lot of emphasis on getting the balance between process and philosophy right, to allocate to hedge fund managers and to achieve the stated performance objectives,” said Mr Echeverría. “The large institutional investors are more process driven, and achieving the performance objective might be secondary. People within those institutions are mainly concerned with career risk, particularly in the case of large drawdown or even fraud; on the whole, it’s not their money as opposed to private investors. The perception is if you are too performance driven you may take too many market risks. To the contrary, Optimal Investment Services gives great importance to institutionalisation of the business and processes, but will always remain focused on performance. As a result of meeting the two sides, performance and institutionalisation, Optimal has developed an institutional and a private client base”.