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Nedgroup Launches Non-Correlated Fund of Hedge Funds

Christopher Owen 3 March 2008

Nedgroup Launches Non-Correlated Fund of Hedge Funds

Nedgroup Investments, the international wealth management arm of South Africa's Nedbank Group, has launched a specialist fund of hedge funds to provide access to underlying funds uncorrelated to equity market risk. The Nedgroup Investments Premium Portfolio will specifically target pension funds, family offices, banks and high net worth individuals in Europe, the Middle East, Africa and Asia, Nedgroup said. The number of conventional hedge funds that are positively correlated to the equity market had reached "unacceptably high levels", said Nedgroup. The objective of the new product was to "offer investors who already have significant market exposure to equities a truly alternative investment vehicle". Andrew Lodge, managing director of Nedgroup Investments (IoM) and Nedgroup Investment Advisors (UK), said: "A truly uncorrelated return will provide investors with the diversification benefit they are looking for. The excess return provided by a high quality market neutral style will prove to be attractive on a relative basis." The Premium Portfolio Fund will comprise asset backed lending within the US, Europe and Asia, specialised distressed debt, structured finance, multi strategy and insurance. The new fund has a capacity of up to $1 billion and will aim for a return of 8 points above Libor, 12 per cent net of fees per annum, with a volatility objective of less than 3 per cent, Nedgroup said. The new vehicle will focus on longer liquidity niche strategies that have already been proven within Nedgroup Investment's existing flagship, the Target Return Fund. These strategies already make up 20 per cent of all holdings in the target return fund. Since its launch in July 2000, the Target Fund has delivered a 4 per cent outperformance of the dollar Libor, "with no down years, against an objective to outperform its benchmark, dollar Libor, by 3-5 per cent," Nedgroup said. Both the premium portfolio and target return funds are listed on the Irish Stock Exchange. Nedgroup Investments has offices in London and the Isle of Man. Assets under management are currently $920 million. Nedbank, its parent comapny, is listed on the Johannesburg Stock Exchange. The principal shareholder is Old Mutual, jointly listed in South Africa and London.

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