Quilter Investors has added a hedge fund replication strategy to its Cirilium Passive Portfolios, which is the first time an alternatives fund has been used in the range.
As part of recent changes to the strategic asset allocation of the passive range, Quilter has added the Goldman Sachs Absolute Return Tracker fund, which is multi-strategy portfolio that invests long/short across equities, bonds, currencies, credit and commodities. Its aim replicate the performance of an aggregate of the hedge fund industry, based on the performance of 3,000 hedge funds.
The alternatives allocation is about 7% of the four risk profiles within the Cirilium Passive Portfolios, from Conservative to Dynamic, although the asset class is not held in the Adventurous portfolio, which invests solely in equities.
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Quilter Investors said it is also in the process of seeding a new passive alternatives fund from another “major asset manager” for use in the range, which will be announced in due course.
“Hedge fund exposure is not widely available in passive fund of funds, but we believe multi-asset portfolios across active, passive and blended strategies should have all the tools at their disposal to enhance diversification to help portfolios perform well in a variety of market environments,” said Sacha Chorley, portfolio manager at Quilter Investors.
“We have been really impressed by the team at Goldman Sachs and the processes they have in place for this strategy,” added CJ Cowan, portfolio manager. “It is a highly liquid and transparent tracker fund and will provide diversification to the traditional equity and fixed income asset classes.”
Elsewhere within the passive portfolios, the team has four new funds to reflect the fixed income element of the strategic asset allocation becoming more “granular”.
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Previously a single broad fixed income index was used, but by breaking this down into four component parts it said allowed the team more freedom to vary the weighting between these sub-asset classes to target the best risk and return opportunities as identified by the strategic asset allocation.
As such, the Vanguard Global Corporate Bond Index fund, the Vanguard UK Investment Grade Bond Index fund, the Amundi JP Morgan GBI Global Government ETF and the Amundi UK Goverment Bond ETF have all been added to the range.
