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Abria readies new products

Date: Wednesday, July 20, 2005
Author: MAR Hedge.com

July-20-2005 - Toronto-based Abria Alternative Investments will roll out two new funds of funds in the coming months - a levered version of its flagship diversified arbitrage product and a new energy fund of funds, according to Davee Gunn, executive vice president of business development.

On August 1, Abria will introduce the Abria XL Fund, a levered version of the Abria Diversified Abritrage Fund, the firm's flagship product, which is available to investors outside Canada. A Canadian-residents-only version will also be launched, Gunn said.

The decision to launch a levered version of its principal fund-of-funds product was taken to increase the firm's risk budget, said Gunn. Abria managers have kept volatility within its diversified arbitrage fund at 2.2% over the past five years, about one-half the targeted risk budget.

"Basically there were two choices: Either to add additional, more directional strategies, or apply leverage to a more proven, low volatility portfolio," said Gunn. "We chose the latter."

Like the flagship fund, the XL fund and its offshore counterpart will be allocated mostly to market-neutral managers, but will be modified slightly to include some directional exposure "if the strategy is consistent with our risk profile," she said.

Both versions will employ variable leverage between two and three times, with volatility targeted at 6-8%.

Both will charge a 1% management fee and a 10% performance fee over a high-water mark, and will be available in US, Canadian and euro share classes. An initial redemption penalty of 2% will apply in the first year, with monthly liquidity available after that.

Separately, Gunn said Abria is preparing to launch the Abria Diversified Energy Fund, an energy-focused fund of funds that will be made available in both onshore and offshore formats on September 1.

Peter Fusaro and Gary Vasey, who run the New York-based Energy Hedge Fund Center, will serve as advisors to the new fund, which will have directional exposure and participate in the entire energy chain complex, said Gunn.

"This will not be just about whether oil is going to $100 a barrel," she said. "This will be about the whole supply chain: exploration and production, transportation, processing, generation as well as the end use - consumption. There are a huge number of opportunities available in the energy complex, not just in Canada but abroad."

While details and specifics haven't yet been finalized, Gunn said she expects the fees and structure to be similar to the firm's other onshore and offshore products.

Founded in 1999, Abria manages approximately C$330 million (US$275 million) for Canadian and international investors.

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