Advance Asset Management will allocate around $400 million from its multi-sector funds into a newly-built alternatives product by the end of the month.
The fund, Advance Alternative Strategies Multi-Blend, will comprise hedge fund managers that use various strategies and also invest in low-cost liquid products such as exchange-traded funds (ETF).
“This new portfolio has a very strong emphasis on diversification and we aim to keep it lowly correlated with equities,” Advance alternative assets portfolio manager Chris Thompson said.
“We believe that an investment in alternatives in this difficult macroeconomic environment will add tremendous value to our diversified portfolios.”
The Advance Balanced Multi-Blend and Growth Multi-Blend will invest 5 per cent and 6 per cent in the alternatives portfolio, respectively, he said.
Half of the alternative strategies portfolio will comprise around 10-15 managers that employed strategies including global macro, long/short equity, managed futures and distressed debt investing.
The other half of the portfolio will be invested in low cost, liquid products, including futures and ETFs that aim to replicate the returns of hedge funds without the high fee burden, he said.
“The Advance Alternative Strategies Multi-Blend Fund will be able to invest in a broad range of ETFs including value style ETFs or specific country and regional ETFs,” he said.
He said that the AQR Wholesale Delta Fund would make up 10 per cent of the overall product.
Additionally, Advance would aim to offer the fund as a standalone product from August.
“Adding it to the BT Financial Group platforms will be a priority and we will look to add it to other major platforms in time,” he said.
“We believe a lot of the features of this fund will make it a very attractive standalone product for financial planners to use. In addition to a highly diversified portfolio of managers and strategies, the fund will offer daily pricing and daily liquidity.”
United States-based manager Ramius Alternative Solutions will help Advance with manager selection, due diligence and portfolio construction for the Advance Alternative Strategies Multi-Blend Fund.
The portfolio’s investment committee will comprise both Ramius and Advance members and will be responsible for approving and terminating managers.
Advance is a unit of BT Financial Group, which is Westpac’s wealth management business.
