To provide access to absolute return strategies JP Morgan Alternative Asset Management (JPMAAM) has been selected. By integrating a number of hedge fund strategies, the objective is to generate capital appreciation over the long term through having a diversified risk profile with relatively low volatility and a low correlation with traditional equity and fixed-income markets.
The breadth of choice of multi strategy investments, potential complexity and use of ‘niche’ strategies make investing in multi strategies a research intensive process. Nikko AM NZ and JPMAAM have undertaken a high degree of due diligence, research and ongoing monitoring of the portfolio.
JPMAAM operate a thorough and comprehensive operational due diligence process and adopt a sceptical approach to hedge fund investing, focusing on what could go wrong and where the risk lies.
The Fund invests into cash deposits and bank bills with highly rated financial institutions. The assets are then used as collateral security for derivatives, in particular, selling options on long-term NZ, US, UK, Euro bloc or Australian government stock.