The hedge fund-of-fund manager for the Amcor corporate superannuation fund has raised $500 million globally in the past year, which it claims is payback for its unleveraged investment style and refusal to impose redemption gates even as its FUM was halved in 2008.
Visiting Australia last month, the chief investment officer of Aurum Funds, Adam Sweidan, said the firm’s flagship fund-of-funds – the trader-biased Aurm Investor Fund and the multi-strategy Aurum Isis Fund – were both up steadily this year because they “did not have to sell the crown jewels” during the liquidity crisis following Lehman Brothers’ collapse.
“A big differentiation has emerged in hedge fund-of-funds. A lot of them got into very illiquid asset classes, they couldn’t resist the temptation to slacken their liquidity terms to attract investors, and then they levered everything up at the fund-of-fund level. We did none of those things [the Aurum funds retain monthly liquidity with 90 days notice] so when investors did need to redeem, we were able to liquidate the portfolio very selectively and methodically”.
Sweidan said the Aurum fund-of-funds had large allocations to macro strategies because they were a good complement to strategies based on listed markets.
“The equity managers have to believe the world is very stable, so that gives them a consistency. But then you have the macro guys who make money when the system cracks – they realise the markets are an artificial construction.”
Sweidan said the fund-of-funds’ correlations to equities and fixed interest had collpased of late, which he was pleased about in an environment where asset bubbles abounded.
“The VIX [volatility index] was at 80, it’s fallen to 20, and the volatility managers and CTAs that were doing well have been hammered. Next year may well be the opposite again – what happens when the quantitative easing ends and instability picks up again?”