I recently reviewed some information regarding the Hatteras Multi-Strategy Fund. This is not a mutual fund. It's an offering that includes interests in hedge funds and private investments in a single vehicle. Targeted strategies include public equity, fixed income, private equity, real estate and energy and natural resources The portfolio is run on the endowment model of investing.
The merits of including a dynamic and knowledgeable "manager of managers" such as this vehicle are compelling. However, the returns have been underwhelming. Has anyone on this site invested in or at least reviewed this product? Thank you.
Comments
In terms of this sort of thing, the London market (which can be invested in via Etrade or Fidelity) does have publicly traded hedge funds and hedge fund-of-funds, as well as private equity (quite a bit of that, although it largely seems Europe-centric) and a wide range of other delightful and bizarre odds and ends (stuff like this: http://www.burfordcapital.com/). No investment minimum (one can start small and buy/sell as they please, as the funds - "Investment trusts" - are traded like CEFs) or qualifications, but exposure to currency fluctuations and other risks (some trade at significant discounts.) Do your own research, certainly, but that - to me - is an easier way to invest in such alternative offerings that requires less outlay (but again, is not without risk.)
Thanks for the feedback. I agree that the records of the Hatteras mutual funds have been less than compelling. The private vehicle returns have trailed the S&P over 1, 3 and 5 year periods (albeit with half the maximum drawdown).
On the subject of the listed vehicles, I've done some research on Altin AG, Absolute Invest, Absolute Private Equity and Third Point Offshore. I don't think that these vehicles are intended for US investors, but their public listing would enable purchase of them. Am I correct that if US investors decide to purchase these or similar securities that they should do so in tax-advantaged rather than taxable accounts? By the way, talk about an esoteric niche in the case of Burford Capital! It's a shame that the SEC bars these vehicles from having US listings (especially given the plethora of truly hazardous financial products that are available domestically). Thanks.
On a non-hedge note, I don't own it, but Fidelity China Special Situations on the London market is managed by Anthony Bolton (http://en.wikipedia.org/wiki/Anthony_Bolton) , who is one of the UK's most well-regarded investment managers. He retired, then moved to Hong Kong and returned to management in 2010 for the China fund.
Finally, I just remembered my favorite weird London Market investment. Do you want to invest in luxury Marinas in various global locations? There's an investment for that: http://www.cnmarinas.com/ Want to invest in luxury resorts in Greece and other nearby areas? There's an investment for that too: http://www.dolphinci.com Various global forests? Got it: http://www.cambiumfunds.com/fund.html
Cambium may be the only true timberland investment available to retail investors. As Ben Inker of GMO says, "You've got to own the trees." REIT's with substantial timber acreage are a poor proxy.
Bluecrest Allblue looks very interesting. 2 of the hedge funds contained in the portfolio are in the top 25 3 year annualized return rankings that appear in this week's Barron's (and 3 of the 8 hedge funds in Allblue are in the top 100). Although the YTD performance figures aren't very good and past returns aren't usually a predictor of future performance, the 19% 3 year average annual return is truly impressive.
Do you own Allblue and similar securities in a taxable or tax-advantaged account?
Thanks.
Whether or not that's "across the board" I don't know, but that's what I've been told. I don't expect sizable returns from Allblue; I expect consistent year/over/year good or bad yearly absolute NAV price returns of the high single digits/low double digits. Additionally, given the flexibility of the fund and its balance between traders and computer-driven trading, I believe it certainly has the potential to fare well and be more nimble during more volatile periods (which it did in 2008.) BH Macro is another fund to look into, as well. I would definitely not look at Bluecrest or BH (or some of the other, similar funds) as replacement funds for stock funds. I would look at them as replacement funds for alternative funds in the US. There are other funds that would be comparable to a stock fund; Bluecrest and BH would be alternatives.
The issue with the Cambium fund is that it's great on paper, but it's a matter of how well its managed, as well as the global timber outlook. The fund has really not done well over the last few years, but is also trading at a substantial discount to NAV (I believe it is a substantial %) So, it depends whether value can be unlocked, similar to other land discussions (St Joe, etc.) However, the global nature of this is what I find interesting and the straight-up/pure play timber aspect (as well as water rights, etc.) However, whether or not it will ever find a way to unlock that value is the question. If it ever actually did, you have an investment trading at a large discount to reported NAV. If not, then, not.
Good article on Bluecrest that discusses aspects of the fund, including the risk management: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aXhE4PJs604c
A review of Allblue: http://www.hedgefundsreview.com/hedge-funds-review/profile/1648874/allblue-bluecrest-capital-management
Overall, I think it's great what's available in London (and there was an article in the WSJ the other day about how they're thinking about putting more restrictions about managed futures funds in the US - somehow I doubt more alternative investments will be made available in the US), but again, I just stress keeping foreign market investments towards the more established and doing research for those who decide to look into it.
https://hatterasfunds.com/pdfpublic.lasso?p=10&kp=8&-session=hatterasfp:626EF8350cc570F524golI7753CC
If I invest in any of the foreign listed funds or funds of funds I'm wondering if I should do so in my taxable brokerage account or my existing, US-domiciled IRA brokerage account. Presumably these vehicles make distributions, and my sense is that such distributions could complicate the tax picture for a US taxpayer receiving such distributions in a taxable account. Have you encountered any issues in this area?
Thanks.
1. You cannot open a foreign market IRA (an account to invest directly in foreign markets), as far as I'm aware. Investing directly in foreign markets (London, etc) has to be within a separate, traditional account. That may not be the case across the board with all services, but that is what I was told. Do you have an account that can invest directly in foreign markets?
2. Many of the alternative funds are not income-heavy and have made little or no distributions. However, this certainly can vary.
3. Many of these funds do not have US "pink sheet" versions and are only available if you invest directly in them on the London Market. A handful have pink sheet versions.
4. If you invest in the pink sheet versions of these funds, the issue is that there is VERY, VERY little volume or interest. The last time that the RIT Capital Partners pink sheet version was traded was 5/5/11. The last time that the Dexion Absolute pink sheet version was traded was ... nearly a year ago. There will often be a large spread between bid/ask, as well. On their home market, many of these trade not only more heavily, but daily. Your broker may charge an added fee for any pink sheet "foreign ordinaries" (symbol ending w/F), as well. In my experience, the broker does not inform of the fee until after purchase.
5. This is my first year investing in these sorts of funds, so have not encountered a tax period with these yet.