BT Investment Management said that its Total Return Fund was not significantly impacted by a segregated mandate with Monterrey Investment Management, a hedge fund manager whose convertible bond arbitrage strategy is understood to have incurred heavy losses over the last six months.
Meanwhile, BT’s first incubated manager, a boutique hedge fund named Voyager Funds Management, has been wound up while its portfolio managers have found jobs outside BT. I&T News understands that at one stage the BT IM Total Return Fund, a hedge fund-of-funds, held a $30 million account with Monterrey, a Melbourne-based multi-strategy hedge fund that invests in Australian equities and ‘equity-linked’ securities, such as hybrid securities and convertible bonds, and at least one of whose pooled trusts is understood to have lost a quarter of its value over the past six months. Dirk Morris, BT IM managing director, would not divulge specific details of BT IM’s investment with Monterrey. However he said that the Total Return Fund’s segregated account with the hedge fund carried risk controls different from those applied to Monterrey’s pooled trusts, and that this account had not returned “any significant negatives”. “We wanted transparency to look through to the risk positions,” Morris said. Against a cash benchmark, the Total Return Fund had generated 3.5 per cent to January on a rolling one year basis, and 6 per cent over three years, but had “just dipped below for the last month,” Morris said. Monterrey would not comment or disclose its recent performance figures for this story. The manager’s website states that, net of fees, its Australian-domiciled Merlin Investment Fund returned 26.9 per cent for the 2006-07 financial year and its Cayman Islands-domiciled Harrier Investment Fund returned 23.3 per cent for the 2006 calendar year. Morris also confirmed that Voyager, the BT-backed pan-Asia hedge fund, was wound up in the fourth quarter of 2007, approximately 18 months after its launch. Morris and Phil Stockwell, BT IM chief operating officer, were unable to raise enough money to buy the fund from Westpac in the pre-IPO stage of the bank’s partial float of BT IM last year. “We tried to buy it off Westpac, but it was wound up instead. “We weren’t able to do the deal as a separate company. We couldn’t arrange the financial structuring pre-IPO. “It wasn’t a returns-based issue,” Morris said. Matt Cook, a senior quantitative analyst with Voyager, has moved across to BT IM to work in a similar role while Andrew Cormie, the fund’s remaining portfolio manager after Leon Christianakis left in March 2007, has joined the Singapore office of Prudential Asset Management as investment director, Asian equities. Christianakis left the boutique after an illness. Cormie told Investment & Technology magazine at the time that doctors had ordered Christianakis “to do something less stressful” after the illness. However in June 2007 he became managing director of equity trading for Deutsche Private Client Asset Management, working from Hong Kong. Voyager began with $15 million in seed capital. Morris said this capital and investment returns, which ranged up to the high single digits, have been handed back to investors.
Future Fund chief investment officer Ben Samild said that FY24 has been a great year for alpha creation, thanks to strong returns in equities and, unusually, across multiple hedge fund strategies all at the same time. He reflected the past few years have been “a difficult time to be an asset owner and to generate positive returns for risk assets” but the Future Fund is tracking well of its long-term mandate.
Simon Hoyle and Darcy SongSeptember 4, 2024
