Aviva Funds International Ltd, the European fund operations of Morley Fund Management, has launched the first sub-fund of its Aviva Alternative Funds SICAV on 25 June 2003; Aviva Alternative Funds – Alpha Optimum (“Alpha Optimum”).
Aviva Funds International Ltd, the European fund operations of Morley Fund Management, has launched the first sub-fund of its Aviva Alternative Funds SICAV on 25 June 2003; Aviva Alternative Funds – Alpha Optimum (“Alpha Optimum”). Aviva Alternative Funds is a Luxembourg-domiciled fund of funds investing into hedge funds and is structured as an umbrella fund with multiple sub-funds.
The investment manager of Aviva Alternative Funds is Morley Fund Management (“Morley”), the asset management company of Aviva plc, which as a group has worldwide assets under management in excess of Euro 340 billion. For the Alpha Optimum sub-fund, Morley has contracted Paradigm Partners NW Inc, trading as Benchmark Plus (“Benchmark Plus”), a privately owned alternative asset management company based in Tacoma, Washington in the United States as portfolio manager. Benchmark Plus founders Mike Dunmire and Robert Ferguson have used their combined experience of more than 30 years exclusively devoted to alternative investment strategies, to create a unique investment approach, which has delivered a "pure alpha generator".
Aviva Alternative Funds – Alpha Optimum is a fund of hedge funds that seeks to achieve high returns independent of the movements in the equity or fixed income markets. Morley aims to create a high risk-adjusted rate of return by investing in a portfolio of hedge funds, as selected by the portfolio manager Benchmark Plus, that have a proven history of generating excess returns on a risk-adjusted basis (Alpha). Morley will be working closely with Benchmark Plus to provide resources on quantitative analysis, asset allocation and derivatives hedging in order to continually maximise risk-adjusted returns for the fund. Morley and Benchmark Plus will be forming a joint Investment Committee to oversee and approve all investment decisions for the fund.
Alpha Optimum will be available in two Share Classes; Institutional Share Class and Private Share Class. The Institutional share class will be targeted at larger institutional investors, pension funds, insurance companies, asset managers and asset allocators. The Private share class will be targeted at professional investors. The minimum investment amount for the Institutional Share Class is Euro 1 million and for the Private Share Class is Euro 25,000. The Fund will be denominated in Euros, and non-Euro holdings will be hedged into euros by Morley.
What are the key benefits of Alpha Optimum?
- The portfolio managers believe that future macro-economic events and their effects can not be predicted with greater success than the consensus;
- The investment process therefore focuses on ALPHA rather than returns;
- The investment process aims to identify, isolate and neutralise systematic risk, resulting in a pure alpha generator;
- Multiple levels of risk control minimise the likelihood of a significant drawdown in any market climate;
- The result is high returns with zero Beta.
Commenting on the launch, Raoul Bachmann, Continental European Retail Director at Morley Fund Management, said: “We are very excited by the launch of this fund which marks an important step in the evolution of our product range to embrace both fund of fund structures and alternative investments. The portfolio manager of Alpha Optimum sub-fund, Benchmark Plus, achieves strong performance by hedging the market risk of the underlying funds, thereby generating pure Alpha. This makes Alpha Optimum one of the few funds that actually lives up to the term ‘Hedge Fund’.”
Commenting on the demand for such funds in the institutional market, Raoul Bachmann added: “Many institutions in Europe have allocated significant proportions of their assets to alternative products over the past three to four years as diversification opportunities in traditional equities and bonds have reduced. Pension fund managers in the US have been successfully investing in hedge funds for some time and we believe that the trend to follow suit in Europe is likely to continue.”
Commenting on the appointment of Benchmark Plus Partners as portfolio managers, Neil Smith, director of Aviva Alternative Funds, said: “We carried out an extensive review of fund of hedge fund managers globally. Benchmark Plus fulfilled all of our selection criteria; sustainable strong investment performance based on absolute and risk-adjusted returns, a clearly defined investment process with robust management of risk and strong commitment by their management; and they impressed us with innovative approach in designing their investment process. The track record of Benchmark Plus is outstanding. We are buying into a process that has shown annualised returns of 16.7%, annualised volatility of 5.6% and a downside deviation of 1.08% from the risk free rate of return (90 day Treasury Bill) during the period 1996 through March 2003. (source: Benchmark Plus). In addition the returns have virtually no correlation to any major financial index. We are extremely proud to be able to link the skills that Benchmark Plus possess with the quantitative risk management and governance framework that Morley Fund Management offers, and we look forward to conferring these benefits on our clients.”
For more information, visit www.avivafunds.com/alternativefunds
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For further information:
Stephen Roberts, head of European Retail Marketing
tel: +352 40.28.20.319
fax: +352 40.83.58.319
e-mail: stephen.roberts@avivafunds.com
GSM: +352 021.265.611
Notes to editors:
- The value of an investment in Aviva Alternative Funds can fall as well as rise. The investor may not get back the original amount invested. Past performance is not a guide to future returns.
- Aviva Funds International Limited is the marketing and distribution agent for Aviva Alternative Funds.
- Morley Fund Management Limited is the investment manager of Aviva Alternative Funds and is a member of the Norwich Union Marketing Group, members of which are regulated in the UK by the Financial Services Authority for life assurance, pensions and investments. Morley Fund Management Limited and Aviva Funds International Limited are Aviva companies.
- Aviva is the UK's largest insurance group, one of the top-five life insurers in Europe and has substantial positions in other markets around the world. Aviva is the world’s seventh-largest insurer based on worldwide gross written premiums.
- Aviva’s principal business activities are long-term savings, fund management and general insurance, with worldwide premium income and investment sales from ongoing business of more than Ł28 billion, and over Ł200 billion in assets under management at 31 December 2001.