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The target size of the fund is $1.5 billion and is aimed mostly at AxaÆs existing client list of European and Middle Eastern investors. The management fee is 1.0%-1.5% and performance fee is 20%
Axa already manages $2 billion in funds of hedge funds. About 80% of its investors are institutions, primarily insurance companies. In existence is a global fund of hedge funds that returned a net 10% during 2007. By introducing this new product, Axa is reacting to demand from those investors for an Asia-specific fund of hedge funds product.
The dummy portfolio has returned a net 14.66% on 3.66% volatility. The target return is 10%-15% with volatility of 6%-8%. Axa thinks that it can achieve lower volatility by allocating a lower weighting to long/short strategies. Whereas the average allocation for long/short strategies in Asian funds of hedge funds is around 60%, the Axa fund plans to assign 42% of its portfolio to long/short, with the remainder ranging between another seven hedge fund strategies. There will be approximately 30 underlying hedge-fund investments.
All the funds must have an established track record. There are parameters about maximum levels of monthly drawdowns and Axa wants transparent access to the managersÆ portfolios. AxaÆs investors have to give 90 days' notice of withdrawals, and on the other side, Axa requires 30 days' liquidity from its hedge-fund managers.
Jo Chan in Hong Kong, strategist for the new fund, will undertake manager due diligence. She had previously undertaken a similar role for AxaÆs global fund of hedge funds. She will continue to report to Chris Manser, the global head of hedge fund activities.
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.
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SGX’s new framework for Spacs will likely provide investors with a much-needed channel for direct deals, but the verdict is still out on whether it will bring liquidity to the bourse.