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Alternative Market Briefing

KStone fund of hedge funds gains in relative value space, up 5% YTD

Thursday, July 07, 2011

Benedicte Gravrand, Opalesque Geneva:

Launched in January 2009, the KStone MultiStrategy fund of hedge funds (FoHFs) invests in a diversified portfolio of funds primarily focused on arbitrage and relative value strategies.

This approach has been successful so far: the FoHFs returned almost 19% in 2009, 8% in 2010, and it is now up 5% YTD (till May), annualising 13.24% since inception. That’s compared to the HFRX Relative Value Arbitrage Index which returned 38% in 2009, 7.65% in 2010, and is now up 1.92% YTD (to May). The index also lost 37% in 2008.

The FoHFs – with domestic and offshore versions – belongs to KStone Partners LLC in NY. It is managed by Mark Kenyon (Chairman and CIO) and Joe Drohan (Senior Managing Director and Head of Portfolio Management), who both recently spoke to Opalesque.

The fund features in Opalesque Solutions' Emerging Managers Database.

The firm itself was created in August 2008, the worst possible time to start a FoHFs (even if most underlying strategies were non-directional).

"We are not market timers," said Kenyon. "But it was absolutely one of the most difficult periods. We launched the funds in January 2009, and yet because of the dislocation that was taking place primarily in our area of expertise in the credit markets and things that happened in relative value and fixed income, it was actually a great time to st......................

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