GIH launches first CTA & Hedge Fund in Kuwait

Published December 10th, 2003 - 03:00 GMT

Global Investment House (GIH) has launched a new fund aimed at providing investors with superior returns over a three to five year time horizon through investments in a diversified portfolio of hedge funds and Commodity Trading Advisors (CTAs).

The Zenith Fund is an open-ended fund, which will be launched in December 2003. It requires a minimum subscription of $50,000, has an initial lock-up period of six months, thereafter it allows investors to exit quarterly.

The Zenith Fund aspires to be balanced in nature and will invest with aggressive managers that aim to produce 15 - 20 percent returns annually. “Our research has found that when combining CTA Funds' and Hedge Funds, correlation to any one-asset class is greatly diminished,” explained Head of the Hedge Fund Group at GIH, Hanadi Al-Ansari.

The fund aims to allocate 50 percent of its assets to CTAs, 25 percent to Fixed Income and Macro Hedge Funds, and the remaining 25 percent to Long/Short Equity Hedge Funds.

The Zenith Fund's pro-forma indicated that the fund returned 20.43 percent for the year 2000, 12.73 percent for 2001, and 15.70 percent for 2002, and has an estimated annual return of 17.21 percent.

The fund offers an attractive risk/return profile with a sharp ratio of 1.9 and a standard deviation of 5.94 percent. Analysts have also indicated that the Zenith Fund has a negative correlation to the global markets, what that means to investors is that the fund will generate absolute positive returns regardless of the direction of the market.

CTAs specialize in trading futures and options markets with high leverage. That means they invest in commodity agreements to buy or sell a particular commodity at a certain price by a certain date. CTAs can invest in futures on everything from oil and gold and other metals to agricultural commodities, currencies, and stock and bond market indices.

Since each of these markets go through bull or bear phases at different times, CTAs have the flexibility to buy into rising trends and sell falling ones. As a result, they've beaten the performance of stocks even after the greatest equity bull market of all time.

Hedge Funds are pools of investment capital, usually contributed by wealthy private investors or investment institutions. They generally focus on a particular investment strategy or an assortment of strategies, and are consequently operated by experienced managers. The Hedge fund managers aim to make absolute returns, meaning their goal is to achieve positive returns regardless of the market direction. — (menareport.com)