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Aberdeen Standard Begins Fundraising For Passive Hedge Fund Strategy

Aberdeen Standard Investments (ASI) has commenced fundraising for its new fund platform that is one of the first to offer a traditional passive method for investing in hedge funds. Drawing on the public market equity tracker model, where half of U.S. equity assets are passively invested, the platform has the potential for significant scale as it looks to take a share of the USD3trn-plus hedge fund market, as well as bring new investors into the asset class.

In order to bring the offering to market, the ASI HFRI 500 Index fund is targeting an initial fundraising of USD$500m by May, 2021 with the focus being to raise assets from institutional investors. The fund will track the HFR 500, an index comprised of 500 hedge funds across a broad range of strategies and will have an investment capacity in excess of USD$50bn. 

The Cayman domiciled vehicle will subsequently allow access to HFR’s investable index family, with circa 30 underlying investable hedge fund strategy and sub-strategy indices, giving investors the opportunity to choose those most suited to their needs. Investors will be required to meet a minimum initial investment amount of USD5 million in order to access the platform.

Russell Barlow, global head of alternative investment strategies at Aberdeen Standard Investments, comments: “Our partnership with HFR means we are able to launch genuinely innovative products like the ASI HFRI 500 index tracking fund. Before now products that attempted to track hedge fund benchmarks were both narrow in scope and the implementation approach resulted in investment outcomes that deviated from the return of the hedge fund industry. The funds available on the ASI index tracking platform are able to address these issues by physically owning each underlying fund benchmark constituents at the index weights, helping overcome the historical impediments. The platform not only allows allocators to ‘own’ the benchmark but it will also allow them to express strategy, sub-strategy and thematic views in a pure way.  By doing so, they can avoid the variability in return outcome comes from the idiosyncratic views expressed by a single fund. If the allocator thinks the opportunity set for Global Macro looks attractive they can now own the benchmark as a clean way to express that strategy view”

Joseph Nicholas, founder and chairman of HFR, said: “We are pleased to support the launch of this landmark advancement for the hedge fund industry. For the first time investors can access HFRI Benchmarks through a family of index trackers.    The flagship HFRI 500 index is a global, equal-weighted benchmark comprised of the largest hedge funds that report to the HFR Database which are open to new investment and offer quarterly liquidity or better. It offers clients a benchmark that’s more representative of the hedge fund industry return while also allowing tracking products to deliver the return of the index as a gateway to investing in a broad, diversified set of hedge fund strategies from some of the most prominent managers in the world.”

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