Opalesque Industry Update - Frontier Capital Management LLP (“Frontier”) announced the launch of a new fund: FrontEdge Managed Futures Fund. |
The Fund is designed to offer investors an efficient method of accessing Managed Futures, and is the second alternative investment fund established by Frontier, following FrontEdge Global Hedge Fund which launched in 2009.
The managed futures asset class is currently experiencing increased interest, as its defensive properties were once again proven in the most recent bear market, with industry returns of around 17% in 2008. The inclusion of managed futures in either traditional equity/bond or more diversified portfolios has been shown to improve risk-adjusted returns, and is one of the most liquid absolute return strategies.
The FrontEdge Managed Futures Fund targets risk-adjusted returns in excess of the average return for the managed futures industry. The Fund is expected to provide excellent portfolio diversification, with low correlations to both equity markets and hedge funds. The Fund employs a unique combination of individual funds, managed accounts (offering daily liquidity and full transparency), and synthetic replication. FrontEdge Managed Futures Fund will be launched with initial investments of $40 million, expected to rise to $60 million by the end of the year.
Michael Azlen, Founder and Executive Chairman at Frontier Capital Management:
“Frontier’s approach to investing is highly evidence-based and the abundant evidence supporting the case for managed futures has always been compelling. Our multi-asset funds have always included an allocation to Managed Futures, due to its high levels of liquidity and its ability to provide diversification of risk while enhancing portfolio returns. For investors constructing their own asset allocation, however, it is not always easy to access the benefits of this asset class: as with any investment there is the need for sufficient diversification and constructing a well-spread portfolio of managed futures funds is both time-intensive and requires expertise.
We believe that we have created a superior fund that could be used as a “one-stop” managed futures allocation within a diversified portfolio.”
Marc-Phillipe Davies, Head of Investments, believes Frontier’s experience in multi-asset investing helps give his team an invaluable edge when it comes to Managed Futures:
“Having thoroughly researched and analysed the Managed Futures industry over the last 5 years, and run a portoflio of direct investments in CTAs over the last 2 years, the team is well versed in both the players and sub-strategies of this unique asset class. As such we will give investors the opportunity to access some of the most successful names in the industry in an intelligent and risk-controlled construct. This portfolio will be executed by a team that not only has significant due diligence experience, but importantly has over five years experience directly trading the instruments that the funds themselves trade – an advantage over many fund of funds whose experience is often limited to just fund due diligence.”
Marc-Phillipe is the co-manager on the Fund. The lead portfolio manager is Alex Gaitan, who has many years’ experience of selecting CTA managers and managing fund of hedge fund portfolios.
FrontEdge Managed Futures Fund will be available to external investors from December 1.
Frontier Capital Management
FrontEdge Managed Futures Fund is the latest in Frontier’s “FrontEdge” range of alternative investment products. The first, FrontEdge Global Hedge Fund was opened in April 2009 and offers investors access the global hedge fund industry with a single investment, combining investments across a large number of single hedge fund managers with a proprietary blend of synthetic replication products.
All of Frontier’s funds are designed to offer a high value proposition to clients, with a disciplined investment philosophy, advanced risk management techniques and competitive fees. Corporate website: www.frontiercapital.com