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IPE special report May 2018

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Institutions put $300m into FTSE hedge vehicle

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EUROPE – Institutions have put 300 million dollars (253 million euros) into the hedge fund vehicle behind FTSE’s new investible hedge fund index, the fund’s asset manager said.

“We’re starting with 300 million dollars in cash and commitments,” said Mark Ellis, managing director at London-based MSS. MSS will manage the Cayman Islands-domiciled platform, known as FTSEhx Fund SPC. FTSE will use net asset value data from the initial 40 funds on the platform to generate its new hedge fund index.

Ellis said the investors were “leading institutions” outside the UK, though he declined to name them. He added that the index would likely go live next month. A spokeswoman at index group FTSE said there is no fixed date for the launch. When FTSE announced the index launch in February it said it would launch in April.

Due diligence on funds is provided by Zurich-based Harcourt Investment Consulting. Harcourt is part of NIB Capital Group – which is jointly owned by the largest Dutch pension funds, Stichting Pensioenfonds ABP and PGGM. Ellis said they were not putting seed money into the fund. Harcourt is paid up to 15 basis points of assets under management for its services.

The FTSE vehicle received approval from the Cayman Islands’ authorities this month and has draft approval from the Irish Stock Exchange, where it will be listed.

Ellis said the new index would be useful for providers of derivatives, due to the close relationship between the index and the underlying assets. “We are managing a fund which drives the index. The two will move without error.”

He added that there could be up to 300 managers on the platform over time. Fund administration is provided by New Jersey-based DPM, with Daiwa providing custody.

According to the Hennessee Hedge Fund Index, the asset class returned +0.29% in March, or 3.35% in the year to date.

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