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By Beverly Chandler, Opalesque London:

Wealth managers Rensburg Sheppards started investing in hedge fund of funds 13 years ago with a first investment in what was then called Finsbury Alternatives before evolving into AIS.

In an interview with Opalesque, Nick Sketch, senior investment director, says: “At the time, what we wanted was decent absolute returns over the life that we were likely to hold it, plus a lowish correlation with equity markets and modest volatility.”

Sketch was at that point using funds of funds, particularly AIS, for its diluted equity return. “AIS was always equity-sensitive but not just an equity fund, and I bought it for people where I needed some money that wasn’t pure equity risk, yet that would develop a good return and particularly where gains wouldn’t be taxed as income.”

Since then, Rensburg Sheppards’ commitment to what it calls ‘Other’ investments has increased considerably. Within their allocation tables, hedge products, commodities and infrastructure are all in the ‘Other’ pool, and the firm has been actively moving clients out of corporate bonds into ‘Other’. “Most clients are encouraged to have between 5% and 10% of their portfolios in ‘Other’” says Sketch.

Somewhat ironically, the big returns over recent years from the hedge fund sector haven’t come directly from investment returns. “If you look at the big wins for us they mostly haven’t been from the hedge fund management” says Sketch. “The big wins were often from ......................

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