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Multi-strategy fund of funds launches

Date: Tuesday, April 20, 2010
Author: Hedge Funds Review

A fund of hedge funds with a performance fee based on a three-year high watermark has been launched by the former director of hedge fund marketing at Dexion Capital.

Rory Hills has co-founded Hilltop Fund Management with Trevor Simon, most recently a due diligence consultant. The company's inaugural fund, the Hilltop All Weather Fund, will invest in up to 15 underlying hedge funds across a range of strategies.

The funds forming the All Weather Fund's portfolio will have a low correlation to each other and will be selected using a bottom-up approach.

Hilltop is charging a management fee of 1% with a performance fee of 10% calculated over a three-year period. The company said it believed that an annual calculation was too short a period to genuinely assess manager skill. The fees will remain fully at risk over the three years and investors would not be locked-in.

As principal portfolio manager Hills will capitalise on the track record he built up at Dexion. Between July 2007 and February 2009 Hills selected nine hedge funds for investors using the same selection process as the All Weather Fund. All nine made positive returns in that period and four were up by over 30%.

The All Weather Fund will target returns of 12% a year over a three-year period, with expected volatility of between 7%-10%.

It is launching with $10 million of seed capital and the minimum investment is 100,000. Redemption is monthly with 120 days' notice.

The fund is domiciled in Gibraltar. Its custodian is the Royal Bank of Canada in Guernsey. It will be administered by Helvetic Fund Administration and audited by Deloitte. Hilltop's UK legal advisor is Eversheds and Hassans is providing Gibraltar legal advice.