47° North Innovation Fund: 47° North Capital Management

European Fund of Hedge Funds Awards 2009

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The 47° North Capital Innovation Fund launched in June 2009 to offer investors access to a diversified portfolio of new and innovative alternative investment strategies.

It combines a thematic set of alternative investment strategies ranging from transportation, electricity, Middle East and Northern African equities, insurance-linked securities, alternative energy to volatility arbitrage and multi-commodities.

The fund benefits from the ‘first mover advantage' in new investment areas by capturing early market inefficiencies. The driving factors in these markets and strategies differ from traditional markets, providing diversification and uncorrelated returns.

Target clients for 47° North's products are sophisticated institutional investors, mainly comprising of pension funds, insurance companies, banks and large corporations. Currently, over 80% of the assets under management are from institutional investors.

Claude Porret, CEO of 47° North, says: "This fund complements our product offering and is a natural extension of our focus on emerging hedge fund managers."

"New and upcoming hedge funds strategies are often managed by newer, independent and entrepreneurial teams. Our Innovation Fund is an attractive offering for investors who want to get access and know-how in regard to new strategies in a diversified portfolio in order to mitigate risks," she says.

47° North traces down innovation through market segmentation and specialisation, new tradable instruments and through moving into emerging markets as they open up to existing strategies.

New strategies considered by the fund include weather trading, electricity, emissions trading, freight and shipping, structured credit and volatility. Existing geographic areas opening up to existing strategies include Eastern Europe, the Middle East and Africa as well as Latin America.

As a company, 47° North is a relative newcomer, but it has plenty of pedigree behind it. It launched in 2006 with a team of veteran capital markets professionals at the helm. "Members of the 47 Degrees North team have performed due diligence on hundreds and invested in dozens of early-stage and other specialised hedge fund managers," says Porret.

The team headed by Porret, Fraser McKenzie and Richard Mueller, has impressive credentials. Between them, they researched and seeded one of the first power hedge funds trading in the Swiss and German electricity markets. They put together the first weather hedge funds and one of the first carbon trading vehicles. They also seeded one of the first securitised insurance risk funds.

Members of the 47 Degrees North team also ran one of the first institutional emerging manager and seeding vehicles in the hedge fund industry while at RMF, gaining broad experience in sourcing and investing in early-stage hedge fund talent across all strategies.

The firm achieved its first significant success in April 2007 through the launch of an emerging manager fund seeded by the California Public Employees' Retirement System (CalPERS). It was one of just three successful applicants out of a field of 97. At the beginning of 2009, 47 Degrees North brought Iveagh (Guinness family office) and CalPERS as strategic partners and minority shareholders in the firm.

FUND FACTS: 47° NORTH INNOVATION FUND

Full name of fund: 47° North Innovation Fund
Name of investment/management company: 47° North Capital Management
Contact: Richard Mueller, Churerstr 77, 8808 Pfaeffikon, Switzerland (+41 55 645 00 00; [email protected])
Launch date: June 2009
Assets under management: $20 million
Annualised return: 12-15% (target)
Annualised volatility: 6-8% (target)
Strategy: thematic
Share classes: US dollar, share class A and B
Administrator: Citco Fund Services
Auditor: KPMG
Custodian: Citco Global Custody
Domicile: Cayman Islands
Management fee: share class A: 1.5%; share class B: 1.25%
Performance fee: share class A: 15%; share class B: 10%
Minimum investment: share class A: $ 100,000; share class B: $1 million
Lock-in/up: none
Redemption period: quarterly with 95 days notice

 

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