Collins Stewart – Absolute Return Fund
Type: Multi-manager hedge fund.
Aim: Growth by investing in hedge funds.
Minimum investment: £10,000/$15,000.
Place of registration: Guernsey.
Investment split: 100 per cent in a range of hedge funds from up to 25 fund managers.
Isa link: No.
Charges: Initial up to 5 per cent, annual 1.5 per cent.
Commission: Subject to negotiation.
Tel: 01481 712889.
David Mullin – Proprietor, Assured Investment Services
Jonathan Holdaway – Associate, Julian Fitter Associates
Andrew Hosking – Managing director, Eggar Forrester
Suitability to market: 7.3
Investment strategy: 8.7
Company's reputation: 5.3
Product literature: 5.7
Collins Stewart has introduced the absolute return fund, an offshore multi-manager hedge fund.
Considering how well the product fits into the market, Mullin says: “With the majority of investors currently suffering from the market downturn during the last 12-24 months, the opportunity offered by the investment objectives laid down by the absolute return fund will fit into the market very well for the majority of investors.”
Holdaway feels that, as it is a fund of funds, it offers diversity in both management and strategy.
Hosking says: “The fund is amongst a number of hedged funds that have appeared over the twelve months or so.”
Turning to the type of client the fund is suitable for, Holdaway says: “New investors in hedge funds with small amounts to invest as part of their overall portfolio. Clients looking to diversify risk from non-correlated returns with reduced volatility.”
Hosking feels that the fund would be suitable for low risk clients, but also those that are reasonably sophisticated and have a diverse portfolio of investments.
Mullin says: “The cautious or first-time investor in the market, or as part of a portfolio for the balanced investor who is looking for stability in part of the investment make up.”
Moving on to the marketing opportunities that will be provided by the fund, Hosking says: “In reality, this is a specialist area and not a product that is likely to appeal to a broad market. The product would very much have to be sold to a client.”
Mullin feels that being able to present the possibility of realistic returns on capital without taking overdue risks should appeal to the majority of investors.
Holdaway says: “It is very much an overlooked and yet potentially attractive market to promote. Few clients are actually aware of this type of fund. In Europe, they are much more popular, and the UK should follow suit in time. Be the first to promote it with your clients as it is forbidden for providers to advertise.”
Casting an eye over the useful features and strong points of the product, Mullin says: “It uses a proven distribution channel for investments which have demonstrated their ability over a reasonable time frame. It has the ability to utilise a mixture of investment styles by not being restricted to one fund manager. It has the ability to invest globally reflecting market returns and is useful for anyone looking at investing for income.”
Holdaway lists active management of managers and strategies to suit actual investment conditions, hedging back into sterling, low absolute risk and access to managers not normally available due to the specialist nature.
Hosking says: “The fund is based offshore and has a minimum investment level of £10,000. There is also a separate US dollar fund.”
When asked about the fund's disadvantages, Holdaway picks up on the fact that it is complicated to explain to clients, there is only one dealing day per month, the notice period for redemptions is eight weeks, the switching fee is high and it is non-income producing.
Hosking also points to the fact that the notice period for redemption is long, and that it is a growth fund not an income fund.