Progressive Alternative Investments Limited (PAIL) has established the progressive European alternative portfolio, a fund of hedge funds that focuses on Europe including the UK.
The fund invests in between 15 and 20 hedge funds from different London-based fund managers. It will aim to exploit inefficiencies in European markets and will take advantage of opportunities created by the Euro currency and closer ties between European countries.
Long and short hedge fund strategies will be the focus of the PAIL fund, although it can invest in arbitrage strategies. However, Richard Hills, a director of PAIL, says arbitrage strategies will initially be kept to a minimum because they are not performing well in current market conditions.
Richard Hills will manage the fund alongside fellow PAIL director Kathryn Graham. Hills and Graham have already identified hedge funds for possible inclusion in their funds portfolio on the basis of risk and return profiles, but have yet to construct a definite portfolio.
Hills joined PAIL in 2001 and has 20 years fund management experience at companies such as Henderson and Aberdeen. Graham has worked with Hill since 1999 and was previously an associate director of fixed income derivatives at SBC Warburg.
Interest in hedge funds is increasing because, if managed successfully, they can make money in the current climate of volatility and uncertainty. This fund may appeal to institutional investors and high-net-worth clients who find its European focus more interesting than a global fund of hedge funds. They may also like the diversity it offers through the fundof funds structure. However, even high-net-worth clients may find this fund of hedge funds too risky.