NEWS - 11

Video (sponsored forum): Ucits structures remain attractive to hedge funds

30 Aug 2011

Alceda Fund Management, Bank of America Merrill Lynch, KB Associates and fund management company Salus Alpha Capital debate some of the reasons hedge funds are interested in Ucits vehicles.

Michael Sanders, CEO of Alceda Fund Management, Eric Personne, head of fund solutions group at Bank of America Merrill Lynch, and Claire Cawley, executive director at KB Associates, together with Günther Schneider, hedge fund specialist with Salus Alpha Capital, discuss the attractions of Ucits structures for hedge funds as well as some of the negative aspects.

For Sanders there are two reasons why a hedge fund manager should be interested in Ucits vehicles. He cited institutional investor preference for more regulated, liquid and transparent structures as well as easier distribution of the fund, not only in the European Union but around the globe.

"There is a huge appetite for launching Ucits funds," agreed Cawley, "and it's driven by investor demand." After the 2008 crisis investors are looking for products offering a regulated solution and solutions that "look like a safe house". "I think you also find a lot of US managers are looking towards Ucits for the purpose of gaining access to a large number of markets," she concluded.

Personne thinks US managers are now aware of Ucits whereas a couple of years ago they were not interested. "If you believe what you deliver is real added value, and alternative investment claims it is added value and I do believe it is, there is no reason why this product shouldn't reach the largest possible audience," he declared.

Hedge fund specialist Schneider confirmed Salus Alpha Capital was one of the first hedge funds to move into Ucits. "The reasons: it's a standardised package, it's safe assets and finally you have a very defined liquidity - and that's always been missing in the offshore world."

View the full filmed discussion

NEWS - 10

Salus Alpha products outperform equity markets

Aug 15, 2011, 

In the current quarter, all Salus Alpha Funds  outperformed global equity markets in what has been a difficult environment. Salus Alpha Managed Futures led the way with a gain of 4.89% in the current quarter, while the US S&P 500 Index lost 2.15%, and the German DAX30 index declined 2.95% in the same period.

The 24 month rolling alpha of Salus Alpha Managed Futures compared to the S&P500 is 5% p.a, while the 24 month rolling beta is currently 0.2. This implies that in the past 24 months, the fund had a return of approximately 5% due to active management (alpha), and 0.40% return due to the positive market beta. The fund's performance was 4.50% better than the performance of the HFRX Macro Index for the period.

The CTAs, Global Macro and FX Managers in the Salus Alpha Managed Futures portfolio profited by continuing trends in Softs, Precious Metals, Industrial Metals, Financials, FX, Energy and Interest Rates.

The Salus Alpha Directional Markets had a performance of +4.64% for the month to date, outperforming the S&P 500 Index by 6.79%. The 12 month rolling alpha of Salus Alpha Directional Markets to the S&P500 is 4% p.a., the 12 month rolling beta is currently 0.2. The performance of Salus Alpha Directional Markets was 2.34% better than the performance of HFRX Systematic Diversified Index.

The Salus Alpha Multi Style had a performance of +3.92% for the month to date, outperforming the S&P 500 Index by 6.07%. The fund's performance was 4.05% above the performance of HFRX Global Index for the period.

The Salus Alpha Equity Hedged had a performance of 0.76% for the month to date, outperforming the S&P 500 Index by +2.91%. The 12 month rolling alpha of Salus Alpha Equity Hedged to the S&P500 is 8% p.a., the 12 month rolling beta is currently -0.2. The Salus Alpha Equity Hedged currently has a 40% exposure to Long Bias, 23% to Market Neutral, 7% to Long Short Variable Bias,  and 30% to Short Bias.

The Salus Alpha Event Driven had a performance of +0.74% for the month to date, outperforming the S&P 500 Index by 2.89%. The 12 month rolling alpha of Salus Alpha Event Driven to the S&P500 is 4% p.a., the 12 month rolling beta is currently -0.1. This implies that in the past 12 months, the fund had a return of 4% due to active management (alpha). The fund's performance for the period was 1.26% higher than the performance of the HFRX Event Driven Index.

The Salus Alpha RN Special Situations had a performance of +0.09% for the month to date, outperforming the S&P 500 Index by 2.24%. The fund's performance for the period was 0.61% higher than the performance of the HFRX Event Driven Index.

The Salus Alpha Real Estate had a performance of -0.02% for the month to date, outperforming the EPRA / NAREIT Index by +1.97%. Salus Alpha Real Estate is a single manager single strategy fund, which invests according to Salus Alpha’s proprietary Global Real Estate Model. The Salus Alpha Real Estate outperformed the EPRA/NAREIT Real Estate Index by 1.97% during the month of July. The current volatility in the Real Estate markets is above the model’s risk threshold. The fund therefore has no allocation to equities and is invested exclusively in risk neutral assets.

The Salus Alpha Commodity Arbitrage had a performance of +8.71% for the year to date until 7/29/2011, outperforming the S&P 500 Index by 5.96%. The fund outperformed the S&P GSCI Index by 0.12%, which booked a gain of 8.59% in the reporting period. The 12 month rolling alpha of Salus Alpha Commodity Arbitrage to the S&P500 is 8% p.a., the 12 month rolling beta is currently 0.0. This implies that in the past 12 months, the Salus Alpha Commodity Arbitrage had a return of approximately 8% due to active management (alpha), and 0.01% return due to the positive market beta. The performance of Salus Alpha Commodity Arbitrage was 12.70% better than the performance of HFRX Systematic Diversified Index.

Salus Alpha Commodity Arbitrage tracks the CAX - Commodity Arbitrage Index. The CAX Index covers the performance of arbitrage strategies, which aim to extract consistent market neutral returns from valuation inefficiencies arising among related commodities - like for example Brent Crude vs. WTI Light Sweet Crude - or among different maturities of futures contracts on one commodity due to Contango, Backwardation and Seasonality.

The SA FX Strategies had a performance of -0.67% for the month to date, outperforming the S&P 500 Index by +1.48%. The FX Managers in the SA FX Strategies Portfolio profited by the USD's weakness vs. Russian Rouble, Norwegian Krone, Canadian Dollar, Australian Dollar, Swedish Krone, British Pound, Swiss Franc, Singapore Dollar, Mexican Peso, Polish Zloty and Brazilian Real. The managers incurred losses due to the Dollar's strength vs. New Zealand Dollar, and due to the USD devaluation vs. Euro, Japanese Yen and Danish Krone.

NEWS - 9

Hedge Funds Review – Video: interview with Günther Schneider, hedge fund specialist, Salus Alpha

Salus Alpha, with $1.1 billion under management, believes investors want regulated products and has been offering its hedge funds and funds of hedge funds as onshore products since 2001.

From inception Salus Alpha was keen to offer investors transparency and liquidity, according to Günther Schneider, head of global business development and a hedge fund specialist at Salus Alpha Financial Service (Europe). He is proud of the fact that Salus Alpha, now with over $1.1 billion of assets under management in a variety of vehicles, was one of the first managers to offer daily liquid Ucits funds in all its hedge fund strategies.

“Ucits has become such a strong story recently,” said Schneider, but he believes investors need to approach alternative products by looking at the strategy as well as the asset managers’ capabilities to deliver performance. “Sometimes people talk too much about the vehicle and do not concentrate on the asset strategy under management,” he noted.

When asked if daily liquidity is more of a marketing ploy, Schneider is adamant that liquidity is “becoming more important” for investors. “If you look at markets and market conditions, people like the idea of having liquid portfolios. We’ve been offering daily liquid alternative investments since 2003 so we’ve been used to structuring products like that and offering it to investors. Yes, they like it. As soon as they see it is possible, they take advantage of [daily liquidity],” he stated.

In a wide-ranging interview, Schneider explained how he could offer an event driven strategy in a Ucits format as well as offering advice to other managers on the benefits of having an extensive network of offices close to investors. He said it was important to have a “presence on the ground”, particularly in the Asian markets. Salus Alpha has offices in Singapore and Hong Kong.

On the question of regulation, Schneider admitted new laws will “have an impact on all asset managers but hedge funds/alternative managers are more in the focus [as far as regulators are concerned] than others”. This, he said, was a good thing as he believes some of the issues being pushed by regulators, like transparency and liquidity, will be good for investors and the market in general. He advocated co-operation with lawmakers and active engagement, rather than sitting on the sidelines as politicians draw up new rules.

Schneider also talked about the attractions of managed futures for investors. He thinks investors will become more discriminating of which CTA/managed future fund managers they choose in future as those who do well in less favourable markets continue to offer strong performance compared with others.