Northwater Capital Management has added two new portable alpha products to its lineup of institutional products: The Northwater Portable Alpha U.S. Bond Fund and the Northwater Portable Alpha U.S. Equity Fund.
Both vehicles are structured as portable alpha offerings, with investors choosing a targeted market index exposure in their choice of fund—either the Lehman Aggregate Bond Index for the bond fund or the Standard & Poor’s 500 for the stock fund.
The active management source for each of the new funds comes from Northwater’s market-neutral fund of hedge funds portfolio. The new vehicles target a return of 275 to 475 basis points, net of fees, in excess of the respective market index.
“These new funds let investors access our extensive experience in managing portable alpha mandates, but with the ease of accounting, reporting and performance attribution that a pooled fund structure provides,” says Bob Kulperger, vice president of Northwater.
“Large-cap equities and bonds make up a large portion of most institutional investors’ portfolios, but traditional active management typically delivers only modest value-added returns compared to the benchmark indices,” says Kulperger. “These new funds are turn-key solutions that target a much higher alpha and are designed to add significant value to market index exposures.”
Northwater has over $9 billion in assets under management and currently manages 27 portable alpha accounts. The firm has $4.4 billion of its assets in its market-neutral fund of hedge funds, almost all of which is used in portable alpha structures.