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GNI stages hedge play

GNI Fund Management has introduced an offshore fund of hedge funds called the GNI Universal fund.

The fund aims for growth by investing in hedge funds and aims for a return of 10 per cent gross a year. It will invest in between 15 and 25 hedge funds from different managers, which in turn may invest in a range of equities, bonds, fixed-interest securities and futures. Examples of the funds held initially include Martin Currie Japan absolute fund, Symmetry Europe and Winton futures fund.

The investment process involves two stages. The first stage looks at economic factors and identifies trends in the hedge fund market. GNI Fund Management will then assess which hedge fund strategies will perform best in the current market conditions and which proportion should be allocated to each style and geographical region within the portfolio. The highest weighting is likely to be global hedge funds, with emerging markets the lowest.

The second stage is concerned with selecting the funds and is constructed around the model portfolio developed in the first stage. Prospective funds are analysed in detail and, once selected, the performance is closely monitored.

The fund is likely to appeal to institutional and sophisticated high-net-worth clients looking for an investment that does not necessarily follow the movement of global stockmarkets. The advantage of this is that investors can make money when stockmarkets are falling or uncertain. However, they are swapping stockmarket risks for more speculative risks which may not deliver the target returns.§

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