“We have included three offshore funds; a merger arbitrage fund, a relative value market-neutral equity fund and a credit fund,” says Karim Leguel, who leads JP Morgan AM’s European hedge fund division. The three offshore strategies are complemented by four Ucits funds in areas such as long/short equities and global macro (CTA).
The fund is to a certain extent Ucits agnostic, explains Leguel. “We don’t care whether the strategies we choose are Ucits or not. We just need to be aware the offshore strategies we use are sufficiently liquid so the fund-of-funds as a whole is Ucits-compliant.”
Ucits constraints, but no performance fee
Because of the Ucits constraints of the overall fund though, “we miss some potential leverage and can’t harvest some illiquidity premia that offshore hedge funds can,” Leguel admits. This is exactly the reason many investors still prefer to invest in offshore hedge funds than in Ucits strategies.
However, that doesn’t mean his fund is expected to perform worse than its offshore equivalents, says Leguel. “We should be able to make a similar return as offshore funds of hedge funds because the managers in our fund don’t charge us performance fees,” he explains. The JP Morgan Multi-Manager Alternatives Fund targets a return of cash + 4-5% and annual volatility below 6%.
The new fund is not the first one of its kind. It bears remarkable similarities to the Neuberger Berman Absolute Return Multi Strategy Fund, which was launched in October 2013 and has $455m in assets under management. The Ucits fund invests in 11 different strategies, both offshore and Ucits. Lead manager Fred Ingham talked to Expert Investor about his fund a few months ago.
