Fund innovation : Emerging managers - healthy returns

Man Investments is a hedge fund group that prides itself on offering investors innovative approaches. Its new Man Vision fund aims to produce an annualised return of 12.5% with annualised volatility of 12.5% by investing in strategies such as Asia and emerging markets, commodities, environmental and energy markets, event-driven and healthcare.As an example of even more way-out strategies, Man Investments head of communications David Gleeson mentioned fine art, movies and freight derivatives as areas that hedge funds are moving into. He added that Man looks to back new managers early: “Hedge funds tend to produce their best returns in the early years and we are keen to get in early with the best and most promising managers.” To this end, it runs a programme called Global Emerging Managers, which will back managers with up to $50m in seed capital.Volatility is another investment opportunity and Crédit Agricole Asset Management co-head of volatility, arbitrage and convertible bonds, Gilbert Keskin, said it is an asset class and an area where skilled managers can produce alpha. “We have two ways to invest in volatility; a directional way or using a long-short approach,” Keskin comments.The directional approach aims to benefit from the tendency of volatility to revert to a mean, while the long-short approach aims to arbitrate volatility discrepancies between different indices or single stocks. In both cases derivatives are used to isolate the volatility element of an option representing an underlying asset.Keskin adds: “Volatility works very well in time of crisis and the alpha generation process is decorrelated from other processes – that is the main reason investors should consider it as an asset class now.”

The article is on :
http://www.funds-europe.com/June-2008/ALPHA-SOURCES-Healthy-Returns.html