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3A launches UCITS III fund of hedge funds

Thursday, October 01, 2009
Opalesque Industry Updates - 3A SA, the alternative investment division of the SYZ & CO Group, announces today the launch of a new UCITS III fund of hedge funds. This type of product preserves the benefits of a hedge fund whilst offering the additional advantages of a well-regulated environment, especially with regard to transparency and liquidity. This new fund, 3A Dynamic UCITS III, is aimed at professional clients only and will not be marketed to the retail market.

A new generation of alternative funds
Whilst the advantages of alternative strategies, in terms of decorrelation or absolute returns, are well known, their limitations, namely low liquidity, lack of regulation and limited transparency, have often meant institutional investors were reluctant to invest in them. The severe financial crisis in 2008 and the problems that ensued for many hedge funds have increased this distrust.

Fortunately, a new generation of alternative products, the UCITS III alternative funds, provides an effective answer to this problem by being fully compliant with the latest regulations on European investment funds. Apart from a rigorous legal framework, these products have the advantage of being recognised by regulators and are therefore eligible for investment from insurance and pension funds. They also benefit from a favourable fiscal treatment in most European countries.

The universe of such hedge funds is increasing rapidly and at present there are approximately 200 such hedge funds. Encouraged by investors and driven by the growth opportunities in this sector, most of the larger alternative managers are positive about offering this type of product.

3A Dynamic UCITS III: a UCITS III fund of hedge funds
In order to fully benefit from these new investment vehicles, 3A has created the 3A Dynamic UCITS III, an alternative fund which invests in UCITS III hedge funds, and which is itself also compliant with the requirements of the UCITS III directive. In addition to the classical advantages of hedge funds, this new product offers the following benefits:

- Strongly-regulated framework. The underlying funds comply with strict constraints in terms of diversification and risk control. The key functions, such as custodian or administrator, must be segregated and are performed by independent companies.

- Transparency. The underlying funds must meet high standards of disclosure, particularly in terms of investment policy.

- Liquidity. 3A Dynamic UCITS III offers bi-monthly liquidity (every fortnight), in line with the liquidity of its underlying funds.

Fund features
3A Dynamic UCITS III is a sub-fund of the umbrella Luxembourg SICAV Oceano. To meet the needs of institutional investors, which are the target clients for this product, the Fund seeks to achieve a low volatility of 2-4% with a return objective of 6-8% p.a. The Fund is well-diversified and comprises between 18 and 25 positions. It will be available in three different reference currencies (USD, EUR and CHF) and will include several share classes.

About 3A SA
3A SA – Alternative Asset Advisors is the alternative division of the SYZ & CO Group and one of Europe’s leading specialists in the field. 3A is the investment manager for a number of funds of hedge funds, including London and Zurich-listed ALTIN and 3A Alternative Funds, a multi-compartment Luxembourg SICAV comprising a number of single-strategy and multi-strategy funds of hedge funds. Following a highly disciplined analysis and due diligence process, 3A selects the best hedge funds worldwide to build tailor-made multi-manager portfolios, funds of hedge funds or structured products. 3A manages a number of high performing alternative products available to institutional investors.

3A manages USD 2.1bn in hedge fund investments. In addition, 3A provides analysis and due diligence on an additional USD 4bn for SYZ & CO.


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