Aberdeen Standard launches hedge fund tracking product including a female manger only fund of funds
One of the UK’s largest fund management businesses Aberdeen Standard Investments launched a new product today. One that was aimed squarely at increasing diversity within the investment industry, in the shape of a female-only fund of hedge funds.
Whilst other ESG (ethical) investing and sustainability factors have garnered many headlines and column inches this year, diversity and inclusivity have not been so prominent but that may be about to change.
The new ASI fund is passive and will track an existing benchmark, the HFR (or Hedge Fund Research) Women Access Index.
A global, equally-weighted index of single manager funds, where a woman has a significant risk-taking responsibility.
The managers in the index must have $80 million or more of AUM and a 12 month or greater track record of active management. The HFR WA index is up by +6.85% during 2020 to the end of October.
There is good reason to think that a female-only strategy could perform well over the longer term. Research conducted by Goldman Sachs and reported by the FT in September showed that all-women and mixed-gender fund management teams outperformed their all-male peers.
Goldman’s sampled a universe of 496 large-cap US equity funds with combined assets of $2.30 trillion. 14 of the funds were managed by all-female teams, and further 49 had a significant number of female managers in the team.
The FT quoted David Kostin, Goldman Sachs’ chief US equity strategist as saying that
“Even after adjusting for risk, female managed funds outperformed their male counterparts amid the coronavirus-related market swings,”
ASI will also offer its clients a fund that tracks another HFR index. The flagship investable 500 benchmark. Which measures the performance of 500 investable hedge funds across a range of strategies and disciplines.
The investable 500 product will launch first and ASI is looking to raise around $500 million or £369 million for the venture by May 2021 Though Aberdeen Standard believes there is capacity in the strategy for more than $50.0 billion.
The new launches come as a result of a joint venture between ASI and HFR that came into being back in February 2019. And which has previously spawned a Global Macro and CTA strategy, alongside a Liquid Alternatives fund.
ASI intends to launch other products on the hedge fund tracking platform with a further 30 strategies and categories in the pipeline.
ASI’s head of alternative investment strategies Russell Barlow said:
“Our partnership with HFR means we are able to launch genuinely innovative benchmark tracking products “
“Before now products that attempted to track hedge fund benchmarks were both narrow in scope and the implementation approach resulted in investment outcomes that deviated from the return of the hedge fund industry.”
Hedge fund investing has often been out of reach of the majority of market participants:
Private clients were often excluded through suitability and qualifying criteria. Whilst institutions were embargoed from investing in unlisted or offshore funds which many hedge funds are.
Moves by the likes of Aberdeen Standard are opening up the space to a much wider audience and that is to be welcomed.
However, they are doing so at a time when hedge fund performance and fee structures are facing ever-greater scrutiny, and when the majority of strategies and funds are failing to match the returns of passive benchmarks such as the S&P 500 over 2020 to date.
Darren is a veteran of the financial markets with almost 36 years of experience under his belt. He has worked in trading, sales, analytical, and research roles, he has been a regular guest & commentator on financial television channels and publications. During his career, Darren has been fortunate to act for and advise major hedge funds and investment banks as well as HNWI. Darren analyses the markets using a blend of technical and fundamental analysis