The announcement today that Dexion Capital is the only adviser and placing agent for listing one of the hedge industry's flagship funds is only the latest in a series of wins for the diversified fund servicing boutique.
In the listed hedge fund sector, some 17 funds of hedge funds have closed down since the crisis began, or are doing so now, but 11 continue. In contrast, the listed single manager hedge fund universe has expanded with IPOs from managers including Brevan Howard, CQS, Neuberger Berman and BlackRock, and significant follow-on fundraising by BlueCrest AllBlue.
As such, since the start of 2010 the industry has recovered. Fund of hedge funds trade on a weighted average discount of around 15% to NAV (taking all continuing share classes into account) while single manager funds trade on a weighted average discount of around 6%. Four funds trade at NAV or small premia to their NAVs. Sector assets are about £6.8bn in 25 products.
Skinner says: “The listed alternatives sector and industry is continuing to grow, and we have seen substantial fund raising in alternative income products such as senior loan funds, CLOs and infrastructure. Investors’ focus remains on yield products – so infrastructure and credit, for example.
“However, investors are also interested in single manager hedge funds. If you give investors something that is uncorrelated and which has a very strong institutional proposition investors are still open to allocating. With the retail distribution review in the UK, the outlook for the listed investment company universe is good.”
Closed-ended funds have a role where underlying assets may be too illiquid to be sensible for open-ended Ucits funds, or where rules prohibit Ucits funds from holding certain assets.
Skinner highlights a number of property funds that had to halt redemptions in the crisis because the underlying assets were too illiquid to allow rapid withdrawals. “For these reasons, the closed-end structure is ideal for property and private equity funds.”