Dutch Fund of Hedge Funds Shop Launches Multi-Strat Vehicle

Oct 29 2007 | 10:46am ET

Finles Capital Management has launched its sixth fund of hedge funds with US $15 million in seed capital. The firm’s latest offering, which debuted last month, is a multi-strategy vehicle designed to beat the JPMorgan Government Bond Index.

The Finles Alternative Bond Fund began trading with five managers on Oct. 1 and is looking to add two more by Dec. 1, according to portfolio manager Mark Baak. The vehicle has a global scope and will focus on low volatility strategies like asset-backed lending, distressed-debt and equity strategies.

Baak said now is an opportunue time for a low-volatility product becasue of the carnage in the credit markets. “We think that investors took too much risk in certain segments (high-yield, emerging-markets debt, collateralized debt obligations, asset-backed securities and anything to do with subprime) to increase their returns on the low-risk bond bucket of their portfolios,” he said. “We think the liquidity crunch and rising spreads have made investors aware that they were taking a lot of risk for a compensation that was, and still is, too low.”

The Altenative Bond Fund has a “no-cure, no-pay cost structure,” charging no management fee but a 20% performance fee with a high-water mark. The minimum initial investment is €10,000 (US$14,400).

Baak said the firm, based in the Dutch city of Utrecht, is marketing the new offering in its home country, where it expects the majority of inflows to come from wealth management shops and private banks. Finles will also use its contacts in Germany, Austria and Hong Kong to gauge investor appetite.

Finles launched its first fund of hedge funds and currently manages US$350 million in total funds of hedge funds assets.


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