In June 2001, Macquarie closed the first series of the Apollo Trust. Over $118 million was raised offering investors the opportunity to access returns which are dependent on the performance of a portfolio of international hedge funds.
Hedge Funds - what are they?
Hedge funds are privately offered investment funds managed by professional investment managers targeting absolute returns to investors. It is estimated that there were over 6,000 hedge funds in operation in 2002, with over US$500 billion in assets.
Hedge funds typically have a large degree of flexibility in terms of their investment mandate. While they mainly invest in listed shares and debt securities, they often make use of techniques such as short selling and investing in derivatives to take advantage of opportunities without the constraints normally placed on conventional asset managers.
Hedge fund managers often have a significant personal financial interest in the performance of the fund they manage. Remuneration tends to be incentive based and managers will often hold investments in the funds they manage, aligning the managers' interests with those of the investors.
Common Hedge Fund Strategies
Hedge funds differ markedly in terms of their investments, management style and risk/return profile. The hedge fund market can be segregated into a range of investment styles, which in turn can be classified into four main strategies:
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Event driven strategies
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Equity long/short
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Relative value
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Tactical trading
These can be further broken down into sub-strategies. The following is a summary of typical strategies which may be used by hedge managers. For an explanation of what each strategy is, click on the strategy title:
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Event Driven
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Equity Long/Short
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Tactical trading
The potential benefits of exposure to Hedge Funds
There are a number of potential benefits which can be gained from investment in Hedge Funds:
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The potential for higher returns - through hedge funds' ability to achieve absolute returns regardless of the direction of the broader market (eg negative equity markets)
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The potential to reduce your portfolio risk - through the fund of funds strategy which aims to minimise the risks inherent to a specific market, asset class, country or single fund
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The potential to diversify from the ups and downs of the market - through low correlation to traditional investments.
Further information
If you are an existing Apollo Trust client or would like to be informed of future product offerings, you can contact Macquarie on 1800 080 033.
Note to investors: This advice has been prepared by Macquarie Financial Products Management Limited ABN 38 095 135 694 (“MFPML”) for general information purposes only, without taking into account any potential investors’ personal objectives, financial situation or needs. Before acting on this general advice, you must consider its appropriateness having regard to your own objectives, financial situation and needs.
The Macquarie Apollo Trust was offered MFPML. MFPML or its associates, officers or employees may have interests in the financial products referred to in this information by acting in various roles including as investment banker, dealer, broker, lender or adviser. MFPML or its associates may receive fees, brokerage or commissions for acting in these capacities You may contact MFPML on 1800 080 033.
MFPML is not an authorised deposit-taking institution for the purposes of the Banking Act (Cth) 1959, and MFPML’s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of MFPML.
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