Benchmark Plus Launches Fund, Uses Derivatives to Hedge Risk

Jan 13 2006 | 8:35pm ET

Fund-of-hedge funds firm Benchmark Plus Management launched its latest long/short partners fund on Jan. 1. The new fund will invest with around 25 managers employing a variety of strategies, from micro-cap to sector funds, according to Robert Ferguson, a principal at the firm.

Ferguson said the new fund, as well as Benchmark's other funds, are unusual in that managers directly hedge all of their systematic exposure with derivatives. "We try to select managers that provide a return in excess of a unique benchmark that we come up with, and then we hedge that benchmark using derivatives, either options or futures," Ferguson said. "The volatility is very low because systematic risk is taken out, so we are able to reduce the risk of the portfolio much more than an average fund-of-funds could."

The minimum investment in Benchmark's new fund is $5 million, and there is no minimum lockup. Currently, the fund has between $250-300 million in commitments, and aims to close at $1 billion. Ferguson said, "we look at emerging mangers and seasoned managers, although the majority of our managers have less than $300 million under management." Benchmark does seed managers, but Ferguson said that the new fund has not yet invested with any first-timers.



In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...