Man Investments Australia and nabCapital have released a portable alpha product targeting large institutions seeking diversification and defensive investments.
The Man RMF Bond Index Plus is designed to out-perform the UBS composite bond index by 200 to 400 basis points a year.
Man Investments and nabCapital have each seeded the fund with $25 million.
Since the credit crisis began last August, global equity markets have fallen -13.7 per cent and the Australian market is down -20.3 per cent.
As a result, institutional investors have started to reduce their allocation to equities, Man Investments Australia institutional business for Australia head Urs Alder said.
Portable alpha on a bond index is a compelling alternative investment for instituitions, he said.
A well-managed hedge fund portfolio has a higher probability of continuous success than active investment management, Alder claimed.
The fund uses the benchmark to generate the bond market return (beta) and invests in the RMF Pure Alpha Strategies Fund to generate uncorrelated excess returns (alpha) in both rising and falling markets.
“Portable alpha is now used widely by institutional investors in Europe and the US. The benefit they like is the ability to generate consistent, low volatile returns in a wide range of market conditions,” Man Investments Australia chief executive John Morrison said.
The monthly minimum subscription is $500,000. The product is open to institutional investors from May 1.
Man Investments Australia is one of Australia’s largest provider of absolute return investments and has $6.9 billion assets under management.
Global parent Man Group has US$75 billion assets under management.
