23/01/2012 Author: David Beattie

Hermes BPK launches $275m institutional investor protection solution

Hermes BPK, the $2.3 bn alternative advisory boutique and fund of hedge funds manager, Monday announced the launch of its Alpha Vault Managed Futures scheme with $275m of investment.

The managed account solution is designed to provide portfolio protection to institutional investors during periods of market turbulence through concentrated investments in the medium term CTAs space, and was developed following discussions with institutional clients throughout 2011, said a Hermes statement.

It uses CTAs to profit from upward and downward price trends in the liquid global futures markets, said the statement.

“While CTAs can be volatile, they have very strong diversifying properties with historically high negative correlation to rapidly declining equity markets," said Hermes BPK founding partner and CEO Matteo Dante Perruccio.

These characteristics were clearly visible in 2008 when managed futures programs returned 18% on average despite over 30% declines in global equity markets,” he added.

“In today’s volatile markets, the fear of missing a prolonged uptrend or being hit by a major down-market move makes CTAs a compelling tool for hedging out part of that potential market risk,” he added.