Van Global Hedge Fund Advisors, LLC (“VAN”) has launched an OLE_LINK1investable hedge fund index, the Van Tracker Fund SPC, Ltd. (“VTF”), that tracks the performance of the Van Offshore Hedge Fund Index excluding Funds of Funds (the “Index”).
The VTF, which launched on May 1, is the first offering based on the Van Companies’ indices and VAN’s proprietary portfolio construction methodology, the company says. The product is designed to permit investors to participate in the strong performance and low risk that the broad universe of hedge funds has demonstrated since its inception.
“We are very excited about the VTF,” says Tom Whelan, Chief Executive Officer. “We have been developing worldwide distribution and are interested in exploring distribution with other potential distributors, institutional investors and other users. The VTF represents the ideal hedge fund investment product because it can be shown to represent the hedge fund universe.
“Institutions such as pension funds, foundations and endowments can choose to use it as their core hedge fund product. We believe that they can take comfort in the VTF’s broad diversification of strategies and funds. Our goal is to have it provide performance over time, equivalent to that of the hedge fund universe. This performance, as measured by our Index, has been excellent over the last 16 years,” Whelan says.
The Index began with a value of 1,000 in January 1988 and climbed to a value of 9,269.86 by March 2004. Over a 16 1/4-year history, the Index has generated a net compound annualized return of 14.7%. Additionally, hedge funds, as represented by the Index, have offered these returns with a reduced risk profile, the company says.
The Index, at a compound annual return of 14.7%, has outperformed both the S&P 500, at 12.4%, and the MSCI World Equity Index at 6.3% with less risk since its inception in 1988, it points out. Hedge funds in aggregate, in most multi-year periods, have provided both higher returns and lower statistical risk than most world equity indices, bond indices and traditional mutual funds. Additionally, research by VAN shows that hedge funds have clearly demonstrated their ability to protect investors’ money during market downturns and have provided an opportunity to earn returns that do not depend entirely on market direction, the company says.
With academic assistance, VAN has formulated portfolio structuring and fund selection protocols to produce a fund that will provide the investor the opportunity to participate in the performance produced by the broad hedge fund universe by tracking the Index. VAN will measure and report tracking error between the VTF and the Index in keeping with the principal of transparency. The VTF is diversified across all major hedge fund strategies in the proportions in which they exist in the universe and provides access to the broadest selection of hedge funds by minimizing constraints.