BlueCrest AllBlue FoF performance is weak, says analyst

BlueCrest AllBlue, the London-listed fund of hedge fund, has performed 4% in NAV terms over the past 12 months.

Oriel Securities, which has initiated coverage of the fund, described the performance as ‘disappointing’ and posted a Negative recommendation. Oriel noted that a number of investment trusts are reconsidering their exposure to listed hedge funds, possibly leading to a contraction of the listed hedge fund sector.

In a note, Oriel said BlueCrest delivered strong sector performance immediately after its May 2006 IPO, compared to other listed hedge funds. The NAV since launch to 11/09/12 has risen by over 70%. But recent NAV growth has been negative.

“Over the last three years, returns have been more modest, with the NAV rising by only 20% since September 2009. We think that relatively low volatility in markets has been a factor in the lower returns delivered. Over the past year, the NAV has risen 4%, ahead of the HFRX Global Hedge Fund Index (£), which has been flat.”

However, investors have seen a widening discount over the past year from 0% to 6%,

resulting in a 2% fall in share price terms. Investors may be wondering whether to exit the sector, but Oriel says AllBlue “warrants further research and stands out in terms of its relatively high market capitalization (£818m) and relatively narrow discount.”

The underlying funds are six BlueCrest funds. The best performing of these funds, which also has the largest weighting in AllBlue (38.7%), is BlueCrest Capital International, a global macro fund, with a performance last year of 5.9%.

AllBlue is managed by BlueCrest Capital Management, which has an AUM of $33bn. Major shareholders include Rathbone Brothers (8.9%), BlackRock (8.2%) and Schroders (5%). 

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