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Old Mutual converts hedge fund of funds to multi-manager

Old Mutual Asset Management has turned its multi strategy hedge fund of funds into a multi-manager fund that will access external managers solely on a managed account basis.

The company decided to switch to a multi-manager approach because its new multi-strategy products team, headed by Richard Tomlinson, is experienced in external manager and strategy selection.

The fund, which was launched in July 2003, will be able to invest in funds and strategies that Old Mutual does not have in house. The company hopes that the changes, with an emphasis on blending managers and strategies, will increase diversification, enhance risk management and lead to better performance.

The fund was previously invested solely in Old Mutual hedge funds covering long/short equity and equity-market-neutral strategies but will now also include macro, currency, commodity trading and fixed-income arbitrage.

External hedge fund managers will be accessed on a managed account basis to provide greater liquidity and transparency than investing in existing hedge funds.

Head of marketing Simon Wilson says: “The use of managed accounts is the key to our approach as it gives us full transparency in what is going on in the fund.

“If we decided to buy a fund, we would not have access to the portfolio on a daily basis but because we do, it helps the portfolio manager understand the risk/return profiles and how to build around them. It also allows us greater liquidity because the assets are ours, so we do not have restrictions on dealing that can be imposed by underlying managers.”

Opal Alternative Invest-ments investment director Frances Clayton says: “The important factor in building a hedge fund portfolio is the manager you want.If they are available on a managed account basis, that is fantastic but it is the last question you ask yourself, not the first. If a manager is worth it, it does not matter how you access them.”


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