Hedge-fund-linked structurers have been looking at ways to offer exposure to hedge fund sectors and single-name funds this year and the trend looks set to continue into next. Goldman Sachs was one of the first firms to focus in on writing capital protection on single-name funds and has been followed by other players.
Barclays Capital this month launched options on Hedge Fund Research's Manager Select funds. The idea is investors will be able to select a basket of five to 10 funds so they can take a view on a particular strategy or group of managers. Antti Suhonen, head of fund-linked structuring at Barclays in London, said the options allow investors to pick and choose the managers within a controlled environment, which is HFR's funds platform. The demand for exposure to specific sectors or managers is coming mostly from high-net-worth investors, explained sales officials, as this group has been buying into fund-linked products for some years now.
The fund-linked community is also pleased with the way it has weathered the Amaranth storm, even if this storm turned out to be more about fear than financial reality. Suhonen noted, "I think for most of the portfolios affected the monetary impact was unfortunate but not the end of the world." Sales officials noted the fund's collapse has made little dent in high-net-worth demand, although it has made some institutional clients more thorough in conducting due diligence into the funds they are looking to buy into.