Hedge Fund Awards 2015

Hedge Fund Awards 2015 www.acquisition-intl.com 52 US Fund of Hedge Funds - Steben Select Multi-Strategy Fund Since 1989, Steben & Company has specialized in bringing alternative investments to sophisticated investors. John Dolfin, Chief Investment Officer, told us more about the firm and the continuing success of the Steben Select Multi-Strategy Fund Steben and Company specialises in multi-manager alternative investment funds. Founded in 1989, the firm focused initially on managed futures funds, later applying that expertise to hedge fund strategies. “Steben’s greatest strength is manager selection,” says John Dolfin, Chief Investment Officer. “We have deep experience in conducting due diligence and analysis of the trading strategies used by both hedge funds and managed futures trading advisors. Our flagship managed futures fund has operated continuously for over 25 years, making it one of the longest running managed futures funds available on the market today.” One of the biggest challenges financial advisors face is that there are far more types of alternative strategies to evaluate compared to traditional invest- ments, Dolfin says. “Most advisors simply do not have the time or expertise to review and assess these strategies and then stay on top of changes over time. “This is the core of Steben’s business and is what we have been doing for financial advisors for over a quarter century. Because of our long tenure and singular focus in this area, we are able to find, evaluate and monitor strategies for advisors so they can focus on their clients and practice.” Steben’s business is built on three pillars, says Dolfin. “First is our commitment to manager research and a high quality due diligence process. Since markets and managers change over time and trading systems decay, we feel keeping our Funds refreshed with the best managers possible is critical. “Second is our focus on education and communication. Alternative invest- ments are structured differently than traditional investments and behave differently in various market environments. Consistent communication and education – in particular during challenging times – is paramount. “Finally, our overarching philosophy is to build funds that we would want to invest in ourselves. We believe that if we put investors first, then our products and business will succeed in the long run.” In 2015, investors are facing serious challenges in deciding where to allocate their capital, Dolfin says. “Equity markets are richly valued after an incredible bull run that started almost six years ago and the Fed’s quantitative easing policy has ended, leaving Government bond yields and interest rates near historic lows. “Adding an investment to non-correlated funds can help lower overall portfo- lio risk. Alternative investment strategies that are not consistently long biased in traditional markets can present very attractive opportunities. This includes certain hedge fund strategies and managed futures funds. “We launched Steben Select Fund in 2013 to make these strategies available to a broader range of investors and financial advisors. Carefully selected hedge funds can be excellent diversifiers. The hedge funds in the Steben Select Fund have been specifically chosen to have low beta and low correlation to traditional asset classes.” Dolfin says the market has seen significant growth in the number of mutual funds that employ alternative investment strategies in recent years. “While there is a lot of excitement around these ‘liquid alts’, they provide both risks and opportunities,” he says. “Mutual fund vehicles can provide non-accred- ited investors access to the diversification of alternative investment strategies with the convenience of daily liquidity, but we feel many hedge fund strate- gies don’t fit into a mutual fund structure effectively. “A mutual fund’s daily liquidity requirement, constraint on leverage, and restrictions on performance fee payments may create a negative selection bias in manager quality. The end result, we feel, is that some of these mutual funds end up without the performance potential of the same strategies deployed in a traditional hedge fund structure.” Steben has been named US Fund of Hedge Funds, for the Steben Select Multi-Strategy Fund. Asked about the benefits of investing in funds of hedge funds, as opposed to individual hedge funds directly, Dolfin says one of the key differentiators is access. “We feel that many accredited investors still don’t have access to quality hedge funds. Some are closed to new investors and others have such high minimums that to build a portfolio of such funds yourself would be prohibitive. For example – to gain direct access to the 8 hedge funds that are currently part of Steben Select Fund, an investor would need US$20m. A fund of funds structure allows investors to receive professional manager selection and diversification into multiple hedge funds for typically a much lower minimum. “We have always felt that the most important factor for success in hedge fund investing is manager selection – and we have over 25 years of experience in doing just that.” The Steben Select Multi-Strategy Fund is a good example of the approach Steben takes to developing solutions for its clients, Dolfin says. Company: Steben & Company, Inc. Web Address: www.steben.com Address: 9711 Washingtonian Blvd, Gaithersburg MD 20878 Telephone: +1 240 631 7600 Fact File US Fund of Hedge Funds - Steben Select Multi-Strategy Fund Steben & Company