AXA Investment Managers has launched what it calls the first fund of "black swan" hedge funds.
The new vehicle has been up-and-running for almost a year and currently manages between €400 million and €800 million for a small number of investors. But AXA plans to begin offering the fund more widely by the end of the year.
"There is a lot of mythology around tail-risk hedge funds; we have to do a lot of explaining," Francisco Arcilla, global head of hedge funds at the French insurer, told Financial News. "If investors look at it like a standalone investment, the demand is likely to be opportunistic and may slacken in calm markets, but if they look at it as an investment solution, as part of their portfolio, it could be of interest always."
One myth that proves true is that there simply aren't that many black swan funds, which seek to profit from improbable market events, available. Arcilla says there are between 30 and 50. But AXA is working with other hedge fund managers to build tail-risk portfolios exclusively for its fund of funds.
"When we need to make a substitution we can go to a long/short manager, say, that has never been known as a tail-risk hedge fund manager but has all the skills," he said. "We often try to build vehicles with managers."
The new fund is run by a pair of portfolio managers, Arcilla said.