Aberdeen Standard Investments (ASI) has signed an exclusive licence agreement with Hedge Fund Research (HFR), a specialist in the indexation, analysis and research of the global hedge fund industry, to launch a series of products that will track a range of investable hedge fund indices.
As part of this arrangement, ASI has incorporated a monthly priced strategy designed to track the HFRI 500, comprised of 500 hedge funds across a broad range of strategies. The investment strategy will subsequently allow access to HFR’s investable index family, with circa 30 underlying investable hedge fund strategies and sub-strategies giving investors the opportunity to choose those most suited to their needs.
In time ASI will also offer tracking funds for thematic indices. The partnership also provides a platform for HFR to create further custom indices on behalf of clients. ASI may then offer investors access to vehicles that will track these HFR indices.
The signing of the agreement follows the successful launch of the ASI HFRI-I Liquid Alternatives strategy, an investment strategy which tracks the performance of an index of around 180 UCITS hedge funds. The strategy launched in February for has grown quickly to USD650 million in assets under management.
Russell Barlow, global head of alternative investment strategies at Aberdeen Standard Investments, says: “This partnership allows for a new benchmark for passive strategies in the hedge fund space. Traditional methods of creating hedge fund benchmarks have tended to fall short of the requirement to be investable or have resulted in sub-optimal tracking errors. HFR has created a series of indices following an approach that would typically be seen in the equity and bond space – ie the ability of a product to physically own the underlying assets held in the benchmark – and applied it to hedge funds. This makes it a much more compelling benchmark for both hedge funds and allocators to reference when reviewing their investment strategies.
“We know from speaking to our clients that many of them see the benefits of accessing the returns available in the hedge fund space through a passive format so we expect there to be healthy demand for the strategies that this partnership will create.”
Joseph Nicholas (pictured), founder and chairman of HFR, says: “Powerful institutional demand has both driven and shaped the marketplace for investible hedge fund indices, which provide not only robust, representative performance benchmarks but which also offer efficient access to leading fund manager performance. This exciting evolution allows institutions to achieve passive benchmark exposure while eliminating benchmark tracking error risk. The collaboration with ASI represents a historic strategic milestone across the alternative and traditional asset management industries, leveraging the core strengths, robust capabilities and expansive global reach of both firms in the construction of this unique platform designed for the next level of hedge fund industry growth and expansion.”
