A foundation investor in JANA Investment Advisors’ Triplepoint hedge fund-of-funds has completed a phased exit from its $200 million stake, but will consider using the consultants’ burgeoning capability in single-manager hedge fund research.
AustralianSuper made the decision to withdraw after only about a year as a Triplepoint investor, according to chief investment officer Mark Delaney, after internal research found that “a lot of the beta exposures within hedge fund-of-funds could be picked up elsewhere”.The big industry fund had allocated to Triplepoint not long after its January 2008 launch, while its phased exit concluded in the first half of this year.
Delaney said the Triplepoint product had done more than most hedge fund products to address the problem of paying excessive fees for beta exposures – by differentiating between alpha (manager skill) and beta return streams – but ultimately not enough to dissuade the fund from preferring single hedge fund investments in future. AustralianSuper retains only one single-manager hedge fund investment to date, with Bridgewater Associates, but Delaney said the fund enjoyed sufficient scale to have more, and would keep an “open mind” to opportunities presented to it by its advisor.
JANA’s head of investment outcomes, Ken Marshman, said Triplepoint still had $400 million under management and had picked up new clients this year, with a 9 per cent net return in the year to September 30 working in the product’s favour. Triplepoint is run by JANA’s Alternative Investment Solutions Group, under Michael O’Dea, which Marshman said was increasingly researching single-manager hedge funds.
In its three year history, O’Dea said Triplepoint had met all but one of its objectives.
It had outperformed the SuperRatings Median Balanced Fund over rolling five year periods (this comparison is made because O’Dea argues Triplepoint could be considered a different way to construct a balanced fund), it had outperformed the HFRX Global Hedge Fund Index over rolling three year periods, its risk/volatility level had been around 6 per cent per annum, he argued its fees were lower then the typical hedge fund-of-fund, and it had provided daily pricing and liquidity throughout its history, to “accommodate better FX hedging and reduce the opportunity cost of investing in hedge funds – that is, when equity markets are very cheap, investors can reduce hedge fund allocations and buy equities”, O’Dea said. The one objective it had not met was its target return, namely cash plus 5 per cent per annum (post fees but pre-tax) over a rolling four year period.