Brevan Howard listed fund offers liquidity and access to best managers
With most of their private funds closed to anyone other than strategic investors, accessing hedge funds run by famed hedge fund manager Brevan Howard is now limited to the listed investment companies.
Delivering consistent above-market returns has its challenges: in 2011, Brevan Howard, like many other large hedge funds, contemplated handing back cash to investors to preserve the performance of its best strategies. The BH Master fund, the principal recipient of cash from investors in the London-listed BH Global feeder fund, was purportedly the focus of the temporary cap.
But now Lord Turnbull, the chairman of BH Global (LSE: BHGG) is reminding investors that the FTSE 250 fund is one of the few remaining ways to tap the admired expertise of Brevan Howard. It invests entirely in other BH strategies, making it a multi strategy but single manager fund.
Where direct investors in the underlying strategies need multiples of millions to participate, BH Global is available via publicly-traded (and therefore more liquid) shares. The fund differs from a fund of funds in that all the strategies are run by a single manager, offering potential fee savings and tighter risk control.
The fund has been trading at around 9%, the lower end of its discount to net asset value range. Caroline Allen asks why BH Global should draw investors:
CA What can a multi-strategy fund offer investors at the moment?
LT Two advantages. One is it gives investors access to a range of Brevan Howard managed funds, hence to a range of strategies or investment styles or geographies, rather than investing in a single one of those funds, some of which are actually closed, so there is an advantage.
The second is that all these funds are managed by one house in a consistent philosophy of risk management, of style, of transparency and reporting. And it avoids the accumulation of performance fees that you get in other multi-strategy funds where you are investing in an investment manager that is putting you into funds of a variety of different analysts.
CA What strategies does the fund have access to?
LT Just under half the global portfolio goes into the Brevan Howard Master fund which has been established for a number of years now. There is then an Asia fund, a commodities fund, two emerging markets funds and a systematic trading that has a completely different trading model-based style. And there is a credit catalysts fund, so a wide range of completely different funds. You’ve got diversification and if any one or two of those are going through a flat spot or maybe declining slightly, there is a greater likelihood that someone else is performing above trend. This produces not only rising NAV but doing so with a very low volatility.