Chicago-based HFR Asset Management, which provides customized funds of hedge funds and hedge fund indices to European institutional investors, has partnered with Oria Capital in Hong Kong to launch a principal-protected fund of funds.
The Asia-focused fund, the HFR Oria Asia Principal Protected Note, will be 50% invested in the OriaAsia Fund, and 50% invested in four HFR sub-indices, says Jennifer Carver, CEO at Oria. Barclays Capital will provide eight-year principal protection. "This gives European institutions the safety of a global fund of funds with the performance of Asian exposure, and gives our Asian investors a global diversification," she explains.
Oria and Barclays are marketing the fund in Asia, while HFR will market it in Europe.
Carver says that cooperation with HFR is not a one-shot deal. More products are in the works but she declined to comment on them.
The note's investment objective is to achieve absolute rates of return of 8-12% annually, with low volatility, by investing mainly in market-neutral and arbitrage strategies, mainly in the Asia-Pacific region. It is 100% principal protected and can use up to 2x leverage. There is a 1.25% annual management fee, a 4% distribution fee and redemption charges that decline over time. Oria serves as investment manager and Butterfield Fund Services is the fund administrator.
Oria was created from the collapse of Charles Schmitt & Associates, having taken over CSA's pair of Asian funds of hedge funds. It now manages $114 million. Carver hopes the new note will raise around $100 million.