AXA Investment Managers is planning to offer an Asian absolute return and a statistical arbitrage hedge fund in the first half of next year to institutional investors. Both funds will be able to use over-the-counter derivatives and the firm expects to raise approximately USD500 million for each strategy over the next three years, according to Joanna Munro, global head of business development and fixed income and structured asset management in London.
Antoine Josserand, director of structured and alternative investment management in London, said the firm will start running the stat arb fund this month and has recently started the Asian fund to build up a track record. The Asian fund has a target return of 20% with a minimum monthly drawdown of 3% and the stat arb fund has a target return of 10-12% with a volatility below 6%.
AXA is still in the process of choosing a prime broker for the stat arb fund. Josserand said the access and quality of borrowing as well as the relationship are the most important factors in reaching a decision. Morgan Stanley is the prime broker for the Asian fund.
The investment manager already runs a managed futures fund, which it set up in August 2000, and a convertible arbitrage fund which it established in March. It is expanding its range of hedge funds as part of a restructuring of the asset manager to have more of an emphasis on alternative investments and structured products. The restructuring reflects the investment clients' demand for risk adjusted return over traditional investment products.
The funds will be aimed at fund-of-hedge-fund managers, including AXA's own fund of funds, as well as large institutional investors and private banks.