Sat, Sep 5, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hilltop launches London-based FoHFs business and All Weather Fund

Monday, April 19, 2010
Opalesque Idnustry Updates - Independent fund management firm, Hilltop Fund Management ("Hilltop"), today announced the launch of its London-based business and its alternative fund of hedge funds approach. The All Weather Fund, managed by Rory Hills, is a fund of hedge funds designed to deliver consistent, absolute returns in all environments through a portfolio of uncorrelated hedge funds, unconstrained by investment style.

The All Weather Fund, domiciled in Gibraltar, will invest in approximately 15 underlying hedge funds diversified by investment approach and geography. Hilltop will pursue a bottom-up investment approach focused on fund selection rather than top-down asset allocation. The investment strategy of each underlying fund will be distinct and sufficiently differentiated to exhibit low correlation to the other funds to provide a genuine diversification solution.

The Fund's fee structure is designed to be more fully aligned with investors' interests. Hilltop believes that performance fees based on an annual calculation is too short a period to genuinely assess manager skill. Hilltop's performance fees will instead have a three year high watermark and remain fully at risk throughout this period. Additionally, the Fund utilises a progressive hurdle rate, which increases over time depending on an investor's duration in the fund.

Hills, Founding Partner and Portfolio Manager said, “Investors in fund of hedge funds have largely been let down: they thought they were buying uncorrelated, absolute returns but received the opposite in the crisis: highly correlated, negative returns. In 2008, over a third of single managers were up (according to Eurekahedge) yet more than 97% of diversified fund of hedge funds were down (BarclayHedge). Almost all fund of hedge funds failed to do their job during the crisis in identifying the winners from the losers."

Hills has a proven track record in selecting successful hedge funds and 23 years of experience working with fund managers. From 2002 to 2009, he was a director responsible for hedge fund marketing at Dexion Capital, where he held an estimated 1,000 meetings with fund of hedge fund managers. During the core crisis period from July 2007 through February 2009, of the nine funds Hills selected to represent to hedge fund buyers all nine were up, and four of them by more than 30%. The approach used to select these uncorrelated funds is now being made available to investors via the All Weather Fund.

Stephen Hedgecock, Principal at Altis Partners commented, "I, together with my fellow Principals at Altis Partners, am delighted to be investing in the Hilltop All Weather Fund from the start. We have known Rory since he first came to scrutinise us in 2003 and have been watching him ever since. His vision and drive, combined with a real skill for identifying talented fund managers is a great recipe for managing the All Weather Fund. We have no doubt that he will be able to provide investors not only with superior risk-adjusted returns but importantly returns which demonstrate low correlation to their other investments.”

Rory Hills continued, “Over the past few years the fund of hedge funds industry has become ‘institutionalised’, with many players converging upon a similar, and in our opinion, flawed investment approach which attempts to replace skill in selecting alpha producing managers and strategies with a formulaic process.

"This process, starting with top down asset allocation, places too much emphasis on trying to predict which strategies might do well in the short term and not enough on trying to find talented managers who can perform well in all environments. This box-ticking approach has created an unhealthy bias towards large, mainstream managers, with around 75% of industry assets managed by barely 3% of managers[1][1].

"The result is an investment approach far more likely to produce ‘hedged’ rather than ‘absolute’ returns. This is a critical distinction in the context of understanding how hedge fund investments fit into a broader portfolio and yet it is a distinction which has become blurred over the past few years as the hedge fund industry (erroneously) became known as the absolute return industry."

Hilltop will instead focus on identifying talented managers, whose distinctive, alpha-producing strategies will be additive to the All Weather Fund. The rationale for well managed fund of hedge funds remains compelling – specialist firms with experienced and talented staff, focused on delivering uncorrelated, absolute returns that can add real value and diversification to a broader portfolio. Hilltop believes The All Weather Fund is better designed to deliver the return profile investors expect from fund of hedge funds. Corporate website: Source

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: New Detroit-based CTA seeks to take advantage of coming volatility[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: An emerging manager has just set up his one-man shop in the city of Detroit. Synchronicity Futures,

  2. Opalesque Exclusive: When the SEC calls, fund managers need to get out of their own way[more]

    Bailey McCann, Opalesque New York: New pressure is hitting alternative investment funds from all angles. So far this month both hedge fund and private equity players have seen enforcement actions, and subsequent fines over fees, disclosures, and misleading statements. Citi one of the biggest

  3. Fortress hedge fund manager David Dredge says markets trouble on the way[more]

    From AFR.com: David Dredge of global hedge fund Fortress has built a career studying, predicting and protecting against the world's major financial crises. The recent convulsions in global sharemarkets are "just the beginning" of a painful adjustment as money drains from the emerging market economie

  4. North America - Puerto Rico agency plans talks with hedge fund creditors[more]

    From WSJ.com: Puerto Rico’s Government Development Bank is planning to begin confidential debt-restructuring talks with hedge funds that own its bonds as early as next week, said a person familiar with the matter. The parties are set to discuss a plan under which the investors would lend additional

  5. Launches - BlackRock’s McKenna starts hedge fund with $270m, Ex-BlueBay fund managers Phillips, Fayman to launch hedge fund in 2016, Dallas lawyer, Wall Street-savvy doctor team up to form biotech-focused hedge fund[more]

    BlackRock’s McKenna starts hedge fund with $270m From Bloomberg.com: BlackRock Inc. has started an event-driven hedge fund one year after hiring Harvard Management Co.’s Mark McKenna to run the strategy. Global Event Partners, which seeks to profit from corporate events such as takeovers

 

banner