“We were initially wary of being able to offer that liquidity,” says Tabbouche, who is head of investments, managed portfolios, with GAM. “But now there are a sufficient number of managers for us to offer it. It is a reflection of the UCITS market place.”
GAM Star Composite Return was among the first fund of UCITS funds when it launched in November 2009. Though the UCITS vehicle was relatively similar to an off shore fund that dated back to 1983, in practice the onshore fund faced some constraints. But these are expected to shrink as the universe of UCITS managers grows.
The fund’s return objective is 7-10% per annum over the cycle. It is investing in about 20 underlying UCITS funds run with hedge fund characteristics but will also invest directly in assets, for example, Treasuries or gold, if their beta is one the managers want to capture. The aim here is to avoid excessive fees when cost effective beta with minimal fees is available.
The corollary is that when Tabbouche and Wainer buy into a fund they are looking for high alpha. “Typically we would expect a fund we invest with to deviate substantially from whatever bench mark it has,” says Wainer, who is global head of private clients & portfolio management with GAM.
The biggest exposure in the portfolio is some 30-35% to long/short equity funds. The managers expect equities to do well for the next few years and are focusing on funds tapping developed markets and large companies along with smaller cap resource and commodities stocks. The second biggest allocation is to macro trading managers with a 20-25% weighting in the portfolio with a typical allocation being 2-5%. These are managers who are characterised by strong risk management and who don’t have a sustained correlation with equity markets. The third largest allocation of 20-25% is to cash and bonds.
The aim is to combine GAM manager selection and asset allocation. “Good manager selection cannot save you from poor asset allocation,” says Wainer. “You need to be in the right place at the right time and then good managers can amplify the returns for the portfolio.”
Key details
Fund name: GAM Star Composite Absolute Return
Management company: GAM
Promoter: GAM
Status: Open
Inception date: 30th November 2009
Strategy
Kind of fund: Fund of Funds
Strategy group: Multi-strategy
Region: Global All
Asset classes: Equities, Currencies, Interest rates, Sovereign bonds, Credit, Convertible bonds, Commodities
Particulars
Currency: USD, EUR
Share class name: USD (Acc)
ISIN: IE00B58TJ395
Bloomberg ticker: GAMSCUA ID
Domicile: Ireland
Listing: Irish Stock Exchange
Fund structure: Investment Company with Variable Capital
NAV calculation: Fortnightly
Liquidity: Fortnightly
Day (if not daily): 2nd and 4th Monday and last
Notice (banking days): 6
Minimum investment: 10,000
Min. investment currency: USD
Income: Accumulative
Fees
Entry fee: 0%
Exit fee: 0%
Management fee: 1.2%
Performance fee: 0%
High water mark: No
Hurdle rate: No
Analysis
Year to Date: - 0.41%
Annualised return: 4.48%
Annualised volatility (monthly data): 4.27%
Sharpe ratio (2%) (monthly data): 0.58
Correlation to S&P 500 (monthly data): 85.50%
Correlation to iBoxx (monthly data): - 33.12%
