Colonial First State Global Asset Management manages a range of alternative investments in asset classes such as private equity, infrastructure and fund of hedge funds. In this section, however, we detail only our management of fund of hedge funds.
Colonial First State Global Asset Management launched a range of fund of hedge fund products in October 2001. The Colonial First State fund of hedge funds group consists of one retail fund, the Global Diversified Strategies Fund, plus five wholesale funds (Australian registered unit trusts, detailed below). Additionally, Colonial First State Global Asset Management has been appointed as investment adviser to a range of Cayman Island domiciled funds with similar underlying strategies.
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Wholesale Global Diversified Strategies Fund
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Fund objective
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To achieve medium to long-term growth by investing in a diversified selection of hedge funds from around the world.
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Strategic allocation
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The Fund is diversified by manager and geography by investing in each of the portfolios of the specific strategies. The Fund may also invest into underlying single hedge funds which do not invest exclusively in these strategies.
The Fund’s allocation is intended to create a pool of investments which blend together to create a portfolio which is likely to deliver our fund objective.
Allocation ranges:
10 – 45% Long short share strategies
10 – 45% Relative value share strategies
10 – 45% Fixed interest strategies
0 – 45% Tactical strategies
0 – 30% Hedged equity strategies
0 – 30% Other strategies
0 – 10% Cash
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Wholesale Long Short Share Strategies Fund
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Fund objective
Fund strategy
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To achieve medium to long-term growth by investing in a selection of long short share hedge funds from around the world.
The Fund is primarily invested with underlying managers who aim to add value through stock selection and management of share market exposure. The underlying share managers can take long or short positions to take advantage of expected share price movements. They may also use leverage and/or derivatives to achieve their aims.
The Fund will predominantly have a net long exposure and so is expected to perform better in rising global share markets.
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Wholesale Relative Value Share Strategies Fund
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Fund objective
Fund strategy
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To achieve medium to long-term growth by investing in a selection of relative value share hedge funds from around the world.
The Fund is primarily invested with underlying managers who aim to add value through stock selection and arbitraging related share securities. The underlying managers primarily attempt to profit by exploiting differences between the prices of similar securities. These may be securities issued by different companies or related securities within the same company. Managers may attempt to add value by holding both long and short positions in similar securities at the same time. They may also use leverage and/or derivatives to achieve their aims.
As a result, the Fund is expected to have a low exposure to movements in share and credit markets.
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Wholesale Fixed Interest Strategies Fund
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Fund objective
Fund strategy
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To achieve medium to long-term growth by investing in a selection of credit and fixed interest hedge funds from around the world.
The Fund is primarily invested with underlying managers who aim to add value through credit selection in high yield, distressed and emerging market securities; and arbitraging related fixed income securities. The underlying managers can take long and/or short positions in fixed interest and credit securities and attempt to exploit pricing differences between similar securities. These securities typically include government bonds, corporate bonds, mortgage-backed securities and other fixed interest investments. They may also use leverage and/or derivatives to achieve their aims.
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Wholesale Tactical Strategies Fund
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Fund objective
Fund strategy
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To achieve medium-to-long-term growth by investing in a selection of tactical hedge funds from around the world.
The Fund is primarily invested with underlying managers who aim to add value through fundamental analysis of global markets and the use of systematic quantitative analysis to forecast likely directions of global markets. The underlying managers may take directional long and short positions across global share, bond, currency and commodity markets. They may also use leverage and/or derivatives to achieve their aims.
Funds in this group include those with opportunistic and/or short-term investment horizons such as macro, currency and managed futures funds.
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Hedged equity strategies
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| Strategy objective |
To achieve medium to long-term growth by investing into a diversified selection of managers around the world whose focus is predominantly on long equity strategies. The strategy generally uses derivative instruments to hedge away the equity market exposure in the portfolio. The strategy seeks to increase the return potential by using borrowings to leverage its investments. |
| Strategic allocation |
The strategy is primarily invested with equity funds that are typically non-benchmarked investment funds which have greater flexibility than traditional investment structures (such as mutual funds); examples of this greater flexibility include the lack of focus on a benchmark, the ability to apply leverage or have a variable cash balance. |
The Wholesale Global Diversified Strategies Fund allocates to each of the underlying funds for both retail and wholesale investors. Retail investors will invest through the Global Diversified Strategies Fund, which in turn invests in the Wholesale Global Diversified Strategies Fund.
Wholesale investors have the choice to:
- invest in the Wholesale Global Diversified Strategies Fund, and/or
- tailor positions in any or all of the underlying strategy funds.
