This article was originally published on 17 January
A Guernsey fund of funds has delivered positive performances
in every month of its first full calendar year of trading
despite significant market turbulence during the second six
months of 2007.
The Hurdle Fund is managed by Guernsey-based Channel Islands
Alternatives (CIA) and takes its name from the fact that the
investment manager only charges fees if the annualised returns
are in excess of 4% a year.
In 2007 the fund delivered an estimated return of 11.89% on
the year. It has a volatility of 3.21% and a Sharpe
ratio1 of 2.2.
"Given the difficult trading conditions in the second
half of 2007 it was quite an achievement to post such results.
Generating this very high quality risk adjusted return reflects
our objective approach to fund management," said CIAs
Director Nick England.
The fund focuses on generating absolute returns by
controlling risk through manager diversification and avoiding a
high correlation with global equity markets.
Mr England said: "Many managers often have higher
correlations to the equity markets than they think and this
serves to undermine the absolute return credentials of their
fund of funds. As an example, both August and November last
year were very difficult markets for equities and hedge funds
in general whereas the monthly returns for The Hurdle Fund
classes were all positive."
He added that his trading experience has allowed the fund to
be constructed in a defensive manner that most other fund of
funds would struggle to achieve.
Mr England has returned home to Guernsey with his family
following 17 years trading derivatives on the exchanges in
He said: "It is very important for me to be close to
the people I work with, whether it is the service providers or
the traders trading the funds invested capital and therefore
locating the business in Guernsey was a natural choice. In
addition, Guernseys strong administration and regulatory
framework made it particularly attractive to domicile The
Hurdle Fund here in the Island."
Guernsey based service providers to the fund include
administrators Trident Trust, Butterfield Bank as custodians
and auditors Deloitte.
Peter Niven, Chief Executive of GuernseyFinance the
promotional agency for the Islands finance industry, added:
"It is very positive to see that managers setting up in
Guernsey are supported by the broad range of professional
services that are resident on the Island. What is even more
important is the fact that greater numbers of high quality
managers are setting up in Guernsey and delivering high quality
returns such as those achieved by The Hurdle Fund."
Mr England said that structuring the fund as a Protected
Cell Company (PCC) a concept pioneered in Guernsey was a cost
effective and efficient way to establish a core fund and feeder
1 The Sharpe ratio is a ratio that shows the amount of
return (in excess of the risk free rate) for a unit of risk
Guernseys investment funds industry: Overall fund
business in Guernsey grew by £8.9bn (5.7%) in the three
months to the end of September despite significant market
turbulence during the quarter. That took the total value of
funds under management and administration to a new high of
£164.5bn an increase of £44bn (36.5%) year on
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