Bestinvest downgrades funds of hedge funds

Bestinvest has downgraded a number of closed-end funds of hedge funds in its latest review.

Philip Gibbs
Philip Gibbs

Alternative Investment Strategies, Dexion Absolute, Dexion Equity Alternative, Dexion Trading, and Ken Kinsey-Quick’s Thames River Hedge+.

Simon Moore, the head of investment trust research at Bestinvest, says the performance of Alternative Investment Strategies (AIS), Dexion Absolute, Dexion Equity Alternative, Dexion Trading, and Thames River Hedge+ had been “mediocre”.

AIS downgraded from three to one star. Dexion Absolute was downgraded to one star from four stars. Dexion Equity Alternative was downgraded from three to two stars, while Thames River Hedge+ and Dexion Trading were downgraded to one star from three.

Moore says: “As a general rule funds of externally managed hedge funds do not have total transparency on all the underlying funds’ trades at all times.

“They may also have lock-in periods so the manager may not be able to switch out of funds or strategies at will.”

He adds: “This can limit flexibility when strategies move in and out of favour and new ones present themselves.”

The Jupiter Second Split investment trust, managed by Philip Gibbs, was left unrated by the firm having previously held three stars.

Moore says: “We hold the manager in high regard and rate his Jupiter Absolute Return unit trust with four stars.

“However it is inappropriate to rate the shares a split capital investment trust, which has a fixed end date, with the same degree of confidence.”

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