LJH Global is taking its recently launched funds of funds to Europe
US alternative investment consulting and advisory firm, LJH Global, plans to market its recently launched fund of funds to European investors. The Cayman-registered market neutral fund of funds, HP Falcon, was launched in January of this year and is run in conjunction with Pergament Advisors. The move follows the establishment of the LJH's European base in London in May 2001. Managing director of the London office, Ron Neumunz, said the fund is aimed at investors who do not necessarily need a fully customised hedge fund portfolio, yet are still seeking diversification into a product whose overall returns are less correlated to global market indices.
The minimum investment for the Cayman Islands registered vehicle is $1m. While the fund has only been in operation since January, LJH and its clients have independently invested for approximately the past five years in all of the 11 underlying funds in Falcon. Over the past 12 months, the fund has returned 12.67% net of all manager fees compared to a S&P500 return of -10.63%. Returns are based on investments made in the underlying Falcon funds prior to the fund of funds launch.
HP Falcon is currently the only pooled fund the group runs. LJH specialises in providing customised absolute return strategy fund of funds for high net worth investors, institutions and intermediaries, as well as directly advising high net worth individuals and institutions on their hedge fund portfolios. The minimum investment in such a strategy would be $10m. In addition, LJH acts as sub-advisor to financial institutions wanting to provide their own branded hedge fund of funds product line. In this capacity, LJH works with groups in the US such as ABN Amro and Aegon.
According to Neumunz, key to LJH's European strategy will be its attention to the areas of due diligence and education in alternative investments. Neumunz thinks there is not enough transparency at present in the industry which makes due diligence not just important, but crucial.
He said: 'We spend a lot of time with existing and potential clients running through the sort of key questions they should be asking hedge fund managers.' He believes the disciplines they bring to this area will set them apart from the growing competition in the European alternative investment advisory market. 'The rapid growth of the alternative asset class, particularly in Europe, presents some major challenges to investors. There are a lot of hedge funds out there being run by relatively inexperienced managers. Asking the right questions will ensure investors do not end up with the lemons.'
LJH has been tracking and analysing hedge fund managers since 1992. Its strategy on research is to employ specialist analysts who develop an expertise in each of the individual hedge fund strategies such as long/short, event driven and fixed income. 'Having individuals who specialise leads to a greater understanding of the complexities of each strategy. The fact that many of our research team have also managed hedge funds means they understand that the research process will differ depending on the strategy.'
LJH conducts its own proprietary in-house research including a mix of proprietary and external analytics and indices to support investment monitoring and advice. The group currently invests in approximately 80 hedge funds out of the 4,200 they track in their qualitative database.
LJH Global's existing client base is spread across nine countries. However, in the future the group expects more than one third of its business to come from Europe. It has been operating on behalf of clients in Europe since 1994. LJH has $3bn in advisory assets globally.
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