Frontier IM adds share classes as family offices return to multi-manager again

Swiss family offices are showing limited signs of regaining faith in funds of hedge funds with adequate liquidity terms, fee structures and diversification among managers, according to London’s Frontier Investment Management.

The return of the investor type is a turnaround from the crisis, when family offices and other wealthy investors had their faith in hedge funds rattled by many managers imposing gates, lock-ups, side-pockets and suspending redemptions.

Michael Azlen, Frontier’s CEO (pictured), suggests this might be changing as his firm has witnessed a recent rise of interest from Swiss family offices in its FrontEdge Global Hedge fund of hedge funds.

Over the last five months Frontier has been in talks with over 50 family offices, predominantly based in Switzerland and the UK, he said.

Roughly 60% have shown a firm interest in Frontier’s product, and several have already invested, he added.

As a result of this, Frontier is adding euro and Swiss franc share classes, alongside the existing US dollar and sterling classes. The euro share class is aimed at Swiss investors seeking exposure to the euro, Azlen noted.

The FrontEdge Global Hedge Fund was launched in April 2009, seeded with $75m of Frontier’s own assets. Assets in it have grown to $90m, Azlen said, due to the recent influx of investment largely from Swiss family offices.

Recent research from Preqin questioned how interested family offices are in hedge funds, despite being early investors in the industry.

They now show the least interest in hedge fund investment, with just 17% saying they would make new allocations over the next 12 months, Preqin’s report stated.

Frontier’s fund of funds has gained favour with some family offices due to its attractive liquidity terms – bi-monthly – fee structure – 1% fixed and 5% performance – and the high number of underlying managers, Azlen claimed.

Roughly 40% of the fund is invested in synthetic hedge fund replication trackers run by large banks offering daily liquidity. The remainder is split across 60 hedge fund managers, ensuring no more than 1% of assets are invested in any single manager.

Rivals rarely use replication trackers in their portfolios as they consider them competitors, Azlen added.

Frontier’s fund range also includes the FrontEdge Multi-Asset Platform fund, a multi-strategy hedge fund, and the FrontEdge Managed Futures fund. Both offer bi-monthly liquidity with five days’ notice.

Frontier was founded by Azlen in 2004, and its flagship multi-asset fund started in September 2005.


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