04/06/2011

European Campaign Paying Off for Kenmar

Kenmar Group is off to a strong start with two funds of funds it began pitching to European investors in recent months.

The Rye, N.Y., firm, which manages $1.5 billion via a series of multi-manager vehicles, has quickly raised $200 million for its Kenmar Liquid Commodity Index and Kenmar Liquid Global Macro Index funds. The Luxembourg-domiciled vehicles are registered with European regulators as UCITS, or Undertakings for Collective Investment in Transferable Securities, which provide investors a high degree of liquidity and transparency. Kenmar has tapped RBS to help market the funds.

The new offerings are dubbed “index” funds because they're tied to some of the 40 hedge funds Kenmar invests in via its main multi-manager product, known as the Clarity Managed Account and Analytics Platform. Kenmar added several managers in advance of the vehicles' launch and is looking to add more.

The global-macro UCITS is up slightly since its Jan. 1 inception. The fund fell 0.25% in January, gained 2% in February, then fell a little more than 1% in March, according to Bloomberg.

Under European Union rules, UCITS must allow investors to redeem at least twice a month. By comparison, most of Kenmar's U.S. vehicles offer quarterly liquidity.

EU regulations also require UCITS managers to provide investors with detailed information about their vehicles' performance and risk exposures. To that end, Kenmar has hired fund administrator GlobeOp to handle reporting and risk analytics for investors.

Prior to the credit crisis, Kenmar had $4.3 billion under management. Unlike many fund-of-funds operators, the 27-year-old firm didn't block investor withdrawals as markets imploded in 2008 — the result being a huge volume of redemption requests.

“We got through 2008, when we did everything we promised our investors,” said Esther Goodman, Kenmar's chief operating officer. “We gave them the liquidity they needed.”

Across the industry, investors have since rewarded managers that resisted throwing up “gates” during the financial crisis. “We are seeing a huge amount of interest over the last three months,” Goodman said.

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