ADVERTORIAL INSIGHT INVESTMENT
Are absolute returns for
every fund manager?
“
Insight has been
managing absolute
return strategies
since 1998 and
the fund managers
of our Absolute
Insight range have
full access to all of
Insight’s investment
resources and our
multi-layered risk
framework
”
Reza Vishkai, head of specialist
investment, Insight Investment
At launch in April 2008,
the IMA Absolute Return
sector was made up of just
17 funds. Today there are
more than 38 consisting of
a very broad range of strategies.
The market’s recent
volatility has emphasised
the desire for downside
protection over performance,
resulting in growth
in the sector coming from
traditional fund managers
seeing the demand for
solutions that are absolute
rather than relative
and hedge fund managers
launching mirror mandates
within a regulated
structure.
Absolute return funds
may have topped the IMA’s
bestseller list in December
2009 and are tipped to
be one of the winners for
2010, but performance has
been varied across the
sector and, whereas identifying
the aim of each
of these funds may be
relatively straightforward,
understanding how they
intend to deliver is often
complex.
l Positive returns
Criterion for inclusion in
the sector focuses on delivering
positive returns in
any market condition, typically
over a 12-month basis.
But is that enough when
choosing a fund, or is evidence
needed to show that
providers have invested in
the specialist infrastructure
that is required to operate
in these sophisticated funds
consistently and within a
regulated environment?
As one of the leading
adopters of the flexibil-
Absolute Insight: demonstrating delivery
Absolute Abs Insight Abs Insight Abs Insight Abs Insight
Insight UK Eq Mkt Neutral Currency Emg Mkt Debt Credit
1-year return 10.4% 3.7% 3% 25.8% 35.3%¹
Positive rolling months 10/10 10/10 10/10 7/10 n/a
1-year volatility 2.6 2.0 3.3 6.1 6.0
Launch date 28 Feb ’07 28 Feb ’07 28 Feb ’07 28 Feb ’07 2 June ’09
Size £280m² £446m £235m £165m £214m
Domicile UK Ireland Ireland Ireland Ireland
Structure NURS Ucits III Ucits III Ucits III Ucits III
Ratings AA S&P, A OBSR A OBSR
Currency: £ (unless otherwise stated). All returns shown are based on net returns. The net returns are based on an annual management fee of 1%
and a performance fee of 10% the calculation of the latter as defined in the fund prospectus. 1. Performance since inception, 2 June ’09. Volatility is
calculated using bi-monthly data points based on net returns. Correlations are calculated using bi-monthly net returns since inception. Rolling 1-year
positive months are based starting from the launch of the IMA Absolute Return Sector 30 Apr ’08. 2. The Absolute Insight Fund invests in the Absolute
Insight UK Equity Market Neutral, Currency, Emerging Market Debt and Credit funds. Source: Insight Investment & Rimes
ity afforded by Ucits III,
Insight Investment consulted
with the regulator
prior to the development
of the investment, operational
and regulatory infrastructures
for its Absolute
Insight range.
“We firmly believe in
Ucits III, not just as a
stamp of approval, but
because we believe it is
a prudent way of managing
risk within a fund,”
says Alex Veroude, fund
manager of the Absolute
Insight Credit Fund.
l Secret to success
Active demonstration of
performance in a regulated
absolute return structure is
key for portfolio managers.
After all, only the most liquid
of hedge fund trading strategies
can be used in a regulated
framework and not all
traditional houses have a
sufficiently integrated risk
framework and derivatives
capability to support these
often complex investment
propositions.
“Insight has been man-
aging absolute return
strategies since 1998 and
the fund managers of our
Absolute Insight range
have full access to all
of Insight’s investment
resources and our multilayered
risk framework,”
says Reza Vishkai, head of
specialist investments.
“We are not treating
these as a separate entity
to the investment activities
we undertake. This is very
much core to what we
do and this represents the
best of what Insight has to
offer from an investment
standpoint.”
l Focused roles
Beyond preservation of
capital, each of the funds
in the Absolute Insight
range has a specific focus,
be that to deliver consistent,
steady returns with
extremely limited market
exposure through a market
neutral equity strategy;
providing diversification in
periods when most other
asset classes correlate by
employing a macro discre-
tionary approach to currency;
capturing the upside
of emerging market debt or
credit markets while providing
downside preservation
in what can be two
very volatile asset classes;
or providing investors with
a multi-strategy solution
that gives access to the
range of Insight’s specialist
absolute strategies mentioned
above, with a single
layer of charging.
The absolute return
sector is growing rapidly
and many have asked if
this is because of investor
demand or the spin
of a marketing machine.
Many funds in the sector
are delivering to investor
needs and, although past
performance may not be
an indication of what will
be delivered in the future,
a full understanding of
the techniques and objectives
an individual fund
is aiming to deliver and a
provider with a demonstrable
track record and robust
risk framework is surely
a good starting point for
fund selection.
42 PORTFOLIO ADVISER [www.portfolio-adviser.com] MARCH 2010
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