Cream of the crop

Hedge Funds Review's European Fund of Hedge Funds Awards 2007 enjoyed its largest field of contenders ever, with around 250 funds entering the prestigious awards, followed by nearly 400 people attending the event at the Royal Horticultural Halls on 14 November

The evening entertained many guests, however, two stood out. The first, Guy Parkes, is from the 33-year old Anthony Nolan Trust, which stands behind the bone marrow donor registry vital for the survival and well-being of people who have leukaemia. The evening raised more than £13,000 for the trust. For more information on its activities spend time at www.anthonynolan.org.uk.

Another individual who stood out was Blaine Tomlinson (see feature on page 14), who received the inaugural long-term achievement in the fund of hedge funds industry award, his work at FRM being at the forefront of the institutionalisation of the hedge funds industry cited by the judges as helping him stand out from peers, while leading the industry almost 20 years ago in the direction it is now taking.

We looked back just 10 years, still to industry veterans, for the first award for the best FoHF over 10 years on a risk-adjusted basis. From the shortlist, including GEMS Low Volatility Portfolio, Olympia Star I, GAM Diversity, Momentum AllWeather and Aurum Investor Fund among others, the judges selected Stenham Universal Portfolio Inc, displaying 10.4% annualised returns and ranking above its peers on the four main aggregate rankings of return over downside volatility, alpha, Sharpe and return over the worst month.

The next award for the best diversified FoHF over three years (risk-return basis) brought names to the fore such as CMA Multi-Hedge Class A Arbitrage, Liongate Multi-Strategy, Mellon Sanctuary Fund II and Solar A Global Strategy. With annualised returns of 18.6% and running second on the aggregate of the above-mentioned rankings, Liongate Multi-Strategy Fund took the award home.

While judges looked first and foremost at the four main ranked criteria, they could also take into account pure returns, as well as volatility, worst month, downside volatility, Sharpe (risk free rate = 4%), and percentage of positive months.

Diversified FoHFs over just one year brought to light CPO II (Atlas Capital Group) and GEMS Multi-Strategy SP1, as well as Sanctuary Fund II again, but it was Culross Global H Fund whose annualised return of 36%, admittedly on annualised volatility of 7.7%, that won the award.

Turning to the specialised funds with one or two underlying strategies, over 10 years GAM Trading USD was joined by HDF Global Opportunties in France, and Stenham Trading Portfolio, among others. And it was GAM that won, and whose 13.6% annualised returns was not the highest in the group, but which ranked best on the four key criteria.

Over three years the specialists were a broader church, including offerings from GEMS, io Investors, Key AM thereafter acquired by SEB, Stenham Advisors and Atlas Capital Group again. GEMS won - again its 15.1% annualised return did not rank it highest, but its aggregate ranking of return/downside volatility, alpha, Sharpe and return/worst month did. (For more on GEMS see pages 10-11).

Over the shortest period, one year, the shortlisted specialists included Aurum Eagle, Eden Rock Structured Finance Fund, and offerings from io, Mont Blanc and Atlas once more. Atlas's Discovery Fund won out on the evening, its first award but far from its first shortlisting this year.

Turning to commodities FoHFs, the returns were good and the shortlist was short, encompassing Fitzwilliam Commodity Plus and Opus Commodities Fund (Class A). The former took the award with an impressive 18.1% return.

Turning to the first collective award, for Europe's best high net worth/retail fund of hedge funds product provider, judges considered breadth of range, return profile, risk management and commitment to the audience, among other factors, whittling down a longlist to a shortlist of three, from which they selected Aurum Funds Ltd for their excellence.

On the institutional side the judges left the list longer, including seven shortlisted groups, key players such as GAM, Gottex, HSBC Alternative Investments and Key AM, among others. However, it was Swiss group UBP that took the prize.

The best newcomers award provided ample evidence that the FoHF industry is in rude health, with returns consistently in double digits, typically above 15%. The diversity of management groups also showed that it is not just the established groups producing excellent risk-adjusted returns for investors. Ultimately it was 47 North's 47 Degrees North New Generation 1848 Fund that won, and took home a well-engraved trophy.

In judging leveraged products the panel took particular interest in volatility and other metrics pointing towards excellent control of risk when gearing was applied. Albemarle was joined by CMA, GEMS Advisors, HSBC and Key AM on a star-studded shortlist. The excellent risk controls evident at GEMS Advisors saw GEMS Multi Strategy 2X win it, with annualised volatility of just 4.4% for 28.7% returns.

For funds of emerging manager the shortlist lived up to its name with just Barracuda BlueSpring Fund (CHF) and Select Opportunities Fund on it. We won't keep you in suspense - Barracuda BlueSpring Fund won it for BrunnerInvest AG.

It was a similar story for the best-performing in-house fund of funds, with just Gartmore AlphaGen Perseus Class A USD and RAB Multi-Strategy making the shortlist. The former won it on the evening.

The next award off the rank impressed the judges with a range of lateral thinking evident from algorithmic-type approaches to FoHFs, asset-based investing strategies, permanent capital, and direct hedging of market risk. Gottex ABI Fund won it for its approach to asset-based investing, as well as a degree of asset-based lending in the portfolio.

Moving to structured products, the award for the best structured product house had a six-strong shortlist, but when narrowed down Gottex Fund Management won out over competitors such as Commerzbank, Credit Suisse, Man Investments and Société Générale, among others. The following award for excellence in the offering of managed accounts off a platform went without peer to Lyxor. The firm followed this up later in the evening by taking the best overall investment platform.

For those seeding new managers, of key importance to keep the industry regenerating, five contendors stood out: Arundel Iveagh, Fortune AM, Ivy AM, Man Group and Weston Atlas Partners Fund. Man Group took it, adding to their award last year for best structured product providerw.

We will not keep you in suspense as to who won the evening's most coveted company prize, for the best group on the basis of their investment process, except to say judges took investment excellence, innovation, a solid team and commitment to superior risk-adjusted returns into account.

Liongate Capital Management won it, before everyone went home tired but happy.