Jeppe Ladekarl

First Quadrant L.P. (FQ), one of world’s largest standalone active currency managers, has launched  the FQ Global Alternative Return Fund, a liquid, uncorrelated, low volatility Australian unit trust for  Australian investors.

The Fund is an alternative strategy that takes long and short positions in 11 developed currency  markets and seeks to deliver positive returns over full market cycles.

With a minimum investment of $25,000, the Fund aims to outperform its Benchmark, which is the Reserve Bank of Australia Cash Rate plus 4%. The Fund seeks a target volatility of 8% through market  cycles.

The Fund’s portfolio is designed to be uncorrelated to traditional assets such as equities and bonds,  as well as other alternative strategies. It aims to offer steady gains when returns are scarce and  markets are under stress with a consistent level of risk over time.

Jeppe Ladekarl, a partner at First Quadrant and portfolio manager of this Fund, says: “The global  financial crisis created a call for investors’ portfolios to include alternative sources of non‐equity  return. FQ’s currency strategy, which seeks to answer that call, was previously only available to large  institutional investors via separate accounts, which entailed significant minimums. This is the first  fund vehicle offering FQ’s currency strategy in Australia.”

“We are known to Australian institutional investors, having built a presence here since the 1990s.  This strategy, now open to Australian investors via an Australian unit trust, was established in 1992  and currently makes up over US$7 billion of FQ’s US$19 billion in assets under management.”

“Currency as an asset class does not behave like other asset classes, and FQ, through its rich  experience seeks to provide a conservative, consistent and profitable approach to currency  management. Factors that drive currency returns are different from those that drive equity and  fixed income markets, and our philosophy as a firm, in turn, drives a very different return. This  strategy targets low correlation with those major asset classes, providing a hedge against them at a  reasonable cost and with better liquidity than most hedge funds.”

“This Fund can be accessed by institutional investors, financial planners and private client  consultants for strong diversification goals. The appeal is that this strategy seeks to deliver a return  outcome that is “non‐directional”, meaning, it is not related to the direction of the equity market,  there are very few quality solutions of this nature available, and it utilizes the world’s most liquid  markets by exclusively trading long/short currencies. We believe there is demand for a liquid  alternative that is not a black box solution. We simply take a view of one developed market  economy compared to a basket of other developed market economies and use currency to express  our opinion.”

“In terms of portfolio construction, investors may be looking for exposure to alternative assets to  improve diversification characteristics because equities are at near all‐time highs, bonds look  challenging and cash yields are uninspiring. With this alternative strategy, we expect investors  should see an improved risk/return profile with better down side protection and quicker recoveries.”

The Responsible Entity for the Fund is Perpetual Trust Services Limited. RBC Investor Services Trust  has been appointed as the Custodian and Administrator for the Trust.

First Quadrant is an Affiliate of Affiliated Managers Group, Inc. (AMG).

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