Absolute Fund Advisors Seeks Targets For Hedge Fund Allocations

Sep 8 2011 | 10:10am ET

New York-based hedge fund allocator Absolute Fund Advisors is currently invested in 18 new and emerging managers and General Partner Jason Konior says that total could reach 25 by year’s end.

Konior who, prior to launching AFA in 2006, owned and ran the retail division of KSH, a $1.2 billion bank, told FINalternatives AFA makes two types of allocations to hedge funds. The initial allocation, he says, is made on a first-loss basis.

“We provide 9-to-1 matching capital to them,” says Konior. “So, if they have $1 million, we provide $9 [million] and they run $10 [million]. They run that $10 million on our platform in a first-loss position, meaning all losses are absorbed by their million. Once the managers have proven themselves on the platform and we’re comfortable with their performance, obviously they’re making money, but more importantly, from a risk perspective, when we’re more comfortable with the strategy, [and] we will go ahead with a more traditional allocation…”

AFA, which currently runs about $220 million, has made two allocations this September—to Quidnet Capital, a global macro strategy, and Rockmore Capital, an equity long/short event-driven fund. Konior says AFA is being approached by many funds, and it has a marketing team that “goes after funds that fit certain criteria.”

The firm likes “liquid, listed equities, options, some futures—to the extent of the major indexes” and low-volatility. Konior says they focus on emerging managers because their allocation model appeals to emerging managers:

“The people who are most attracted to this model are ones that are seeking growth in AUM and institutional exposure,” he says. “A billion dollar fund is not going to need the AUM boost that we’re offering.”

In addition to the “AUM boost,” AFA offers managers institutional exposure via its platform and, provided they prove themselves through the first-loss model, Konior says AFA is quick to allocate traditional assets to their best managers.

While the firm will allocate to managers world-wide, Konior says it currently focusing on Europe and Asia.

“We’re always looking for talent,” he says.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.