Hedge Fund Awards 2015 www.acquisition-intl.com 16 Best Market Neutral Fund-of-Funds Peak Core Hedge Peak Core Hedge is a market neutral fund of hedge funds run by Peak Asset Management in Stockholm, Sweden, that invests in a blend of uncorrelated hedge fund strategies globally. Per Djerf, Head of Asset Management, told us more about the firm, the fund and its goals Peak Asset Management is making its name as a leading Nordic hedge fund manager. But the firm is offering more than just pure hedge funds. Per Djerf tells us that there are actually two separate business divisions operating independently of one another. “Obviously, one is the Investment Management division, where we run our hedge funds and managed accounts,” says Djerf. “Moving into 2015 we will have two multi-strategy fund offerings, one managed internally and one focusing on external managers, as well as two internally managed single strategy funds. “The other is our Advisory division, where our Financial Advisors work with clients to tailor portfolios and long term strategies to their specific needs and wishes. Here, we offer an integrated platform with unlimited investment opportunities and unbiased advice. As we do not accept third party compensation, and Advisors are not incentivised in any way to recommend our own funds or other specific investment products, we can ensure that the best interest of the client always comes first.” The award-winning Peak Core Hedge is a market neutral fund of hedge funds that invests in a blend of uncorrelated hedge fund strate- gies globally. It has proven very popular with clients of Peak, as well as outside investors, in the current market environment. “The aim of the fund is to generate superior risk-adjusted returns in all market con- ditions through active portfolio management and a careful manager selection process,” says Djerf. “We strive to deliver a long-term annual growth rate of 6-8 percent net of fees with a reward-to-risk ratio above 2 to 1 and low Beta to traditional asset classes, such as global equities and bonds. For the calendar year of 2013, net returns for institutional shares were 7.0 percent with a volatility of 1.1 percent.” The fund is engineered to provide a one-stop solution for investors looking to add defensive hedge fund exposure to their portfolio. “In our view, most investors – both wealthy individuals and institutions – are still very underweighted in the asset class,” says Djerf. “This could be partly because most investors would not want to go “all-in” with a single manager or a specific style of investing, which means a lot of work to build and maintain a solid portfolio. Through Peak Core Hedge, we do the heavy lifting with regards to portfolio construction, manager selection and risk management. Our investors can keep their focus on overall asset allocation and reap the benefits of risk diversifi- cation and uncorrelated returns.” Many people think that, as a multi-manager product, Peak Core Hedge primarily goes out and finds the very best fund managers and invest with them. “Indeed, finding ‘the best in the business’ by some standard is the edge that some of our competitors claim to have,” says Djerf. “While identifying great managers is certainly important, we find that the top-down view of how the portfolio is composed in terms of dif- ferent investment strategies and the way that these complement each other in different market environments is the main driver of risk-ad- justed performance. For example, an arbitrage-style strategy could be neutral in Beta but turn out to be short Vega. In that case we would look to combine that strategy with positive Vega exposure from another strategy in order to offset any implicit biases and keep the overall portfolio as market neutral as possible. In our analysis we put special emphasis on bear market conditions and tail risk events to make sure that we do everything possible to protect capital in adverse situations. “Another important point of difference is that we are very mindful of our market neutral mandate. Therefore, we are unlikely to include some of the strategies that are most popular with hedge fund investors in general. One example would be trend following managed futures, a strategy that is inherently dependent on directional market bets because it seeks to exploit the trending nature of markets. There are many top of the line managers in this space and if the goal was to mirror the hedge fund universe, we would probably allocate 10 or 15 percent of the portfolio to this type of funds. For the purposes of Peak Core Hedge, however, it would invariably add market sensitivity and lessen our return consistency which, as we speak, is 90 percent pos- itive on a monthly basis. This is also one reason why we are relatively uncorrelated with other multi-strategy funds. “Lastly, we run a portfolio that is diversified, but not to the point of being diluted. Too often, portfolios get bloated and lack focus. We want each of our holdings to have a meaningful impact on overall performance. It currently consists of nine broad strategy classifications, which we call Primary Strategies, such as Long/Short Equity or Fixed Income Arbitrage. Underlying these classifications is a total of fifteen funds, which are run by thirteen mutually independent managers across the globe. We never invest in any of our own funds as this would certainly call into question the objectivity of the selection process.” Djerf says the firm feels very honoured to have been named Best Market Neutral Fund-of-Funds. “This award, to us, reflects the effort Company: Peak Asset Man- agement Name: Per Djerf Email:
[email protected] Web: www.peakam.se Address: Hamngatan 15, 111 47 Stockholm, Sweden Phone: +46 8 400 282 00 Fact File Best Market Neutral Fund-of-Funds