AQR opens Global Risk Premium Trust to Australian platform investors

Mon, 13 May 2013 21:45:13 +0000

AQR Capital Management announced today the introduction of new unit class within the AQR Global Risk Premium Trust designed to make that investment strategy accessible to a larger number of Australian investors.

The new Class 1F units come with additional disclosure and a smaller minimum investment size (A$25,000). The changes make them suitable for use on Australian platforms and for distribution through financial advisors or directly to investors.

The Trust, which is domiciled and registered in Australia, was launched to institutional investors in November 2011. It has attracted strong institutional interest, and currently has more than A$950 million of assets under management (as at April 30, 2013).

The Trust’s objective is to produce attractive risk-adjusted returns while diversifying investors’ exposure to equity risk. It invests in a globally diversified portfolio of equities, fixed income and commodities, allocating its investment-risk budget evenly across asset classes and actively managing its portfolio to maintain that balance through the market cycle.

“Our Global Risk Premium strategy utilizes a risk-balanced approach to portfolio construction, which aims to produce attractive risk-adjusted returns through exposures to a broad range of asset classes,” said Jeff Dunn, an AQR Principal who runs the firm’s Australasian business.

Risk-balanced funds seek to produce attractive risk-adjusted returns by investing in a globally diversified portfolio of equities, fixed income and commodities. Broadly defined, risk-balanced funds allocate capital based on risks rather than asset classes. A typical risk-balanced portfolio begins with less exposure to equities relative to traditional portfolios and invests more in other asset classes. As a result, its risk budget is not concentrated in equities, but spread more evenly across other assets.

AQR currently manages more than US$25 billion globally in the Global Risk Premium strategy, which it has managed in offshore vehicles since early 2006.

“The strategy has generated relatively high risk-adjusted returns over a period that has been challenging for investors,” Dunn said. “The strategy’s live performance since inception clearly demonstrates the value of diversifying away from traditional equity dominated portfolios.”

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Lonsec releases 2010 Sector Review – Single Manager Hedge Funds

Wed, 28 Jul 2010 06:21:16 +0000

Lonsec has released its 2010 Single Manager Hedge Funds Sector Review, covering 16 funds of which four received Lonsec’s highest rating of “Highly Recommended” – the BlackRock Scientific Global Markets Fund, Aspect Diversified Futures Fund, Man AHL Alpha and the Winton Global Alpha Fund. One new fund was added to the Recommended List – the AQR Delta Fund (Recommended).

Lin Ngin, Senior Investment Analyst with Lonsec commented, “The distribution of ratings in the 2010 review has a distinct positive skew, due to our focus on reviewing a selective list of high quality offerings, rather than just rating a large number of products.”

Sector themes

Fund flows

Retail fund inflows across the range of funds rated in this sector review have generally been flat. However managers researched by Lonsec have reported greater interest in hedge fund products from institutional clients.

“Although we have seen signs of life in this sector, with US13.7 billion of inflows into the global hedge fund industry in Q1 2010, this is still substantially lower than the US$100+ billion per annum in inflows from 2002 – 2007,” said Ngin.

“An interesting point regarding these inflows is the destination of the money – of the US$13.7 billion inflow, US$15 billion went to larger, established hedge funds managers – this means a number of managers experienced net outflow.”

New products

In last year’s Lonsec review, there were 10 new funds rated – this year, just one.

“Not surprisingly, the dearth of new retail offerings is intertwined with the lack of retail inflows,” observed Ngin.

“This sector is very prone to ‘flavour of the month’ products, whether they be new managed futures products in 2009 (this strategy had a very strong 2008) or commodities based funds.”

Regulation

A major fallout from the global financial crisis has been the policy and regulatory response by government authorities world-wide, particularly in relation to regulating the hedge fund industry. Many of these regulations remain in the proposal stage and have not been enacted.

“Lonsec is generally supportive of any steps to improve transparency, although some proposed regulations such as remuneration controls, leverage limits and bans on shorting appear to be driven by hostility to the hedge fund industry as a fallout of the financial crisis.

IMPORTANT NOTICE: The following relate to this document published by Lonsec Limited ABN 56 061 751 102 (“Lonsec”) and should be read before making any investment decision about the product(s).
Disclosure at the date of publication: Lonsec receive a fee from the fund manager for rating the product(s) using comprehensive and objective criteria. Lonsec’s fee is not linked to the rating outcome. Lonsec does not hold the product(s) referred to in this document. Lonsec’s representatives and/or their associates may hold the product(s) referred to in this document, but detail of these holdings are not known to the Analyst(s).
Warnings: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to “General Advice” and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (‘financial circumstances’) of any particular person. Before making an investment decision based on the rating or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek further advice on its appropriateness. If our General Advice relates to the acquisition or possible acquisition of particular financial product(s), the reader should obtain and consider the Product Disclosure Statement for each financial product before making any decision about whether to acquire a product.
Disclaimer: This document is for the exclusive use of the person to whom it is provided by Lonsec and must not be used or relied upon by any other person. No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by Lonsec. Conclusions, ratings and advice are reasonably held at the time of completion but subject to change without notice. Lonsec assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, Lonsec, its directors, employees and agents disclaim all liability for any error or inaccuracy in, or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it.

Date: 28 July 2010