Superfund's multi-strategy fund for high networth investors

Managed futures specialist, Superfund has launched a new multi-strategy diversified fund named Superfund White in Singapore, one that co-opts several different strategies to achieve consistent high returns with relatively low volatility regardless of the economic or market environment.

Investors would be able to profit not only from rising but also falling markets due to the various strategies, which includes the ability to short or hedge positions through futures contracts.

The new fund will use a combination of three Superfund trading strategies in five underlying and existing funds – the Superfund C & Superfund C GOLD; Superfund RED & Superfund RED GOLD and Superfund BLUE – employing what's essentially a technical analysis trends approach to investing in different asset classes.

The overall portfolio is highly diversified as Superfund employs a fully automated trading system to invest in over 100 international futures markets covering underlying instruments such as bonds, equities, currencies and commodities as well as more than 2,000 individual stocks across global markets.

Superfund White will invest 20% in a medium-to-long terms futures strategy, which has an average holding period of 4 months (Superfund C & C Gold); 30% in short-term futures with an average holding period of 4 days (Superfund Red & Red Gold); and 50% investment in market neutral equities, which also has an average holding period of 4 days (Superfund Blue).

While many of its investors – which comprises some 50,000 high networth individuals and institutional investors worldwide – may be familiar with the Superfund C, Gold and Red funds, the Superfund Blue fund which invests in equities has only been made available recently after being tested with Superfund's own investment capital since Aug 2007.

Past performance (since Aug 2007) in US$



The Blue portfolio, according to Aaron Smith, the managing director of Superfund Financial (Singapore), has managed a return of 25.86% since its inception or an annual return of 14.78%. It employs a market neutral long equity model trading in over 2,000 stocks across global stock markets with the exposure of each stock position hedged by using index futures to reduce market risks.

Meanwhile, investors in the Superfund Red Gold would have seen a return of 263% between Oct 2004 and March 2009 (versus 90% gain on physical gold or gold ETFs) or an annual return of 33.25%.

The average annual return for Superfund C between May 2001 and March 2009 is 30%, noted Mr Smith who added, "While the maximum drawdown (loss) was negative 35.4%, an investor who stayed invested over that period would have seen a cumulative return of 702%, or a doubling of investment every 2.4 years over a eight-year period with our aggressive long-term futures strategy."

This trading strategy, which uses technical analysis to recognize trends by taking long or short positions, also meant that the Superfund C fund has a low correlation to traditional asset classes.

He pointed out that most of the managed futures funds managed by Superfund were up between 36% and 75% last year. Returns from its funds were net positive in February, April, May, and September through to December 2008 despite the onslaught on global equities last year.

"The average investor might not have realised that the managed futures strategy is one that has mostly outperformed stocks and bonds not just in 2008, but over the last 30 years. It is one that can perform well in both equity bull markets and bear markets and achieved through extreme diversification and very low correlation between different asset classes," said Mr Smith.

"At Superfund, we believe that we are entering the information age in investing. In the past century or industrial age, it's the buy and hold strategy that dominated. In the next, it will be one in which is based on who has the best trading strategies."

"Because these different trading strategies have very little correlation towards each other, they offer an entirely new level of diversification, thus helping to further increase long-term returns while significantly reducing volatility."

"This unique combination of non-correlating investment strategies offers an attractive alternative for any portfolio. Investors will need to look at alternative investments – not just stocks and bonds – if they are to recoup their losses over the past year," he added.

Superfund's managers are targeting a return of 18 to 20% with a recommended holding period of at least 5 years for the Superfund White portfolio.

The fund is only available here through Independent Financial Advisors (IFA) and private banking channels to accredited investors.

The minimum initial investment is US$100,000 with subsequent top-ups in multiples of $25,000. The management fee is 0.5% per annum. Besides Singapore, the fund is currently available in the region to high networth investors in India, Indonesia and Hong Kong. It was previously launched in Australia and Europe.

Established in 1996, Superfund currently has about 400 employees in 18 countries with US$1.65 billion assets under management as of end-2008. Its investment centre in Singapore is located on the ground floor at the SGX Centre.

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