Signet Global Fixed Income Fund: Signet Capital Management

Ninth European Fund of Hedge Funds Awards 2010

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Launched in 1999 in the aftermath of the Russian debt crisis, the Signet Global Fixed Fund has a 12-year track record annualising around 8% a year. This performance has helped Signet Capital Management establish a reputation as a specialist fund of hedge funds provider in fixed income, exploiting the full range of opportunities available along the entire credit curve.

The fund has generated consistent annual returns since inception and stayed within its stated objective of Libor plus 4% to 8% with low volatility of 5%. It has limited correlation to market movements affecting traditional asset classes while preserving investor capital during times of market stress.

“The fund aims to provide consistent annual returns by removing excessive market correlation and then builds on a series of small positive returns,” explains Tim Gardner, head of business development.

He says the portfolio tends to flow back and forth between event-driven credit repair opportunities and more macro-oriented rate, currency and sovereign credit opportunities.

The fund has experienced several investment cycles since inception, each providing different opportunities on an asset allocation and geographic basis. For example it has captured the gains from credit cycles and was biased towards credit up until 2006, during which time the macro allocation declined accordingly.

Then the bias swung the other way until 2009, at the end of the first stage of the downturn when credit opportunities once again looked attractive. The fund is currently looking towards credit, especially European credit and reducing its US credit exposure.

“The European debt crisis is the first, and so we are looking to exploit that though increased exposure to distressed and interest rate opportunities,” says Gardner.

The fund also invests in emerging markets with the split currently about equal between Asian and Latin American markets.

Gardner says the aim is to start with a solid top-down view but that the portfolio is actually built using a bottom-up methodology. This ensures that the end result is the best it can be within the fund’s risk parameters.

Signet attributes much of its success to the experience of its team. Founder, chairman and co-head of investment management Robert Marquardt leads Signet Group's top-down process of identifying investment opportunities while focusing on the most pertinent investment risks. He is also intimately involved in hedge fund due diligence. Marquardt has two decades of experience with alternative investments.

CEO and co-head of investment management Serge Umansky joined Signet in 1999. His oversight of the group's research and development efforts has resulted in what the company believes is a cutting-edge proprietary risk management system targeting specific risk characteristics of hedge fund portfolios.

Thomas Canning is director of Signet's US operations and is also a portfolio manager. Canning, with two decades of experience with alternative investments, joined Signet in 2000. The final member of the management team is André Jaun who is also head of risk management. He joined the group in 2007.

Manager selection is a three-step procedure involving identification, evaluation and selection. Throughout the process Signet’s analysis focuses on four areas relevant to the hedge fund manager: people, investment strategy and risk, fund-specific criteria and business and operational risks.

Signet undertakes systematic monitoring of its managers on an annual, semi-annual and monthly basis. The fund has around 60 underlying funds and turnover is around 20% annually.

Fund facts
Full name of fund: Signet Global Fixed Income Fund
Portfolio managers: Robert Marquardt, Serge Umansky, Thomas Canning and André Jaun
Investment/management company: Signet Capital Management
Contact: Tim Gardner ([email protected])
Launch date: July 1999
Assets under management: $800 million (at September 2011)
Annualised return: 8.2%
Annualised volatility: 5%
Strategy: diversified fixed income
Share classes: US dollar, euro, sterling, Swiss franc, Swedish krona
Administrator: BDO Simpson Xavier, Dublin
Auditor: KPMG, Dublin
Custodian: HSBC Institutional Trust Services, Dublin
Legal counsel: Maitland, Luxembourg
Domicile: British Virgin Islands
Listing: Irish Stock Exchange
Management fee: 1.5%
Performance fee: 5%
Minimum investment: €250,000
Lock-in/up: none
Redemption period: quarterly with 90 days’ notice

Highly commended: Best performing specialist fund of hedge funds over 10 years

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