Jupiter brings European hedge fund onshore

Jupiter is joining a trend to bring offshore hedge funds into regulated onshore environments, by merging its Cayman-domiciled Europa hedge fund with a sub-fund of its Luxembourg Sicav.

It cited some investors’ need for transparency, increased liquidity and regulatory oversight as reasons.

Allocators who wanted to make “hedge fund-type investments”, but onshore, would not face “some of the perceived limitations” of investing in an offshore variant, the group said.

The Sicav deals daily, on five days’ notice.

Shareholders for the European equity long/short fund agreed the move today.

After assets in the hedge fund have moved across, the offshore vehicle will close.

Investors have been given the choice of redeeming for cash, or having their shares rolled into the Jupiter Europa Sicav.

The investment policy of the fund will be adapted to that of the original hedge fund.

This portfolio weathered 2008’s market storm relatively well. Whereas global shares fell about 43%, Europa’s US dollar denominated shares fell 15.2%, according to investors. Hedge funds overall lost 20% of their value that year, said Hedge Fund Research.

The onshore fund will be run by European fund manager Stephen Pearson, who managed the hedge fund for almost a decade since its launch. Michael Buhl-Nielsen will be deputy manager.

Cedric de Fonclare, co-manager of the Jupiter Europa Sicav since its launch in January 2010, will step back from management. He will continue managing the Jupiter European Opportunities and Jupiter European Special Situations funds, said a spokeswoman for Jupiter.

Richard Pavry, director at Jupiter Asset Management, said the hedge fund and the Sicav had “similar objectives within different legal frameworks. We believe the Sicav’s sophisticated investment powers, plus the fact that it is registered in Luxembourg, could help to make it more appealing to potential investors, particularly in mainland Europe and in the institutional market.”

Pearson said: “Jupiter Europa will continue to be managed as a bottom-up stock picking European long/short equity strategy able to access the full spectrum of European markets with the same management combination in place. I am delighted we are able to make this investment strategy available to investors in a more liquid, transparent and regulated form with minimal impact on our strategy.”

Jupiter has two more offshore hedge funds, Global Financials and Hyde Park. But the spokeswoman said Jupiter would have to receive sufficient indication investors in those funds wanted a similar shift, before considering similar moves.

“It depends on what the client demand is, you have to look at all of the funds separately.”

Jupiter’s shifting of Europa onshore – the first such move the London-based group has made for its hedge funds – comes at a time opinion in the hedge fund industry is divided over whether to remain offshore, come onshore, or run a hybrid model.

A study by KPMG and RBC Dexia Investor Services last quarter found 49% of managers it canvassed were not moving offshore funds onshore and had no immediate plans to do so, while 51% either had, or were considering it.

The study pointed to “likely increased interest in redomiciliation in 2012 in advance of implementation of the Alternative Investment Fund Managers Directive,” the EU’s plans to regulate its hedge fund industry while potentially making life more difficult for funds remaining offshore.

 

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