Winner: Best multi-strategy hedge fund and Winner: Best directional hedge fund over three years

The Directional Opportunities Fund is a directional fund with a broad mandate allowing it to invest in multiple sub-strategies across all asset classes.

The fund takes an opportunistic approach with an unconstrained investment methodology, relying heavily on the judgement and experience of the fund’s portfolio manager and founder of CQS, Michael Hintze.

The fund sources, constructs and trades a global portfolio using fundamental and quantitative analysis, employing a range of investment styles including directional, relative value and arbitrage.

These styles are then applied across a range of asset classes, including equity, credit, convertible, foreign exchange, interest rate, commodity and volatility.

According to Hintze this fund’s “exceptionally broad focus reflects the firm’s and my reading. In this fund you get my views distilled through the lens of CQS’s research and idiosyncratic work.”

Although the fund can invest in any strategy, Hintze believes over the next 12 months credit and equity markets will provide interesting idiosyncratic investment opportunities on both the long and the short side “if you’re willing to do the work”.

“There will be various volatility products such as foreign exchange off the back of equity and credit which I think is still interesting. You’ve still got a very target-rich environment but you have to do the work,” he emphasises. This could mean returns in upcoming months are idiosyncratically based, he adds.

The fund’s team is made up of 20 professionals who examine both fundamental and quantitative research. The quantitative research acts as a filter for the broader fundamental ideas.

According to CQS the depth of in-house credit research resources when considering the fundamental drivers underpinning an investment are what sets it apart from its peers. This is further strengthened by the strength of the quantitative analytics team which enhances awareness of comparative valuation models and their limitations.

Hintze struggles to locate any one challenge for the fund over the last three years, simply commenting that running the fund “is always challenging”. These challenges can also be rewarding. Hintze is particularly pleased with the fact that the fund honoured its commitment to its investors in terms of liquidity and returns throughout the financial crisis.

Fund fact
Full name of fund: CQS Directional Opportunities Fund
Name of portfolio manager: Michael Hintze
Name of investment/management company: CQS
Contact information: Michael Rummel, CQS, 5th Floor, 33 Chester Street, London, SW1X 7BL (+44 (0)20 7201 2491; Michael.Rummel@cqsm.com; www.cqs.ch)
Launch date: July 2005
Assets under management: $1.310 billion (at March 31, 2011)
Net cumulative performance since inception: 244.91% (at March 31, 2011)
Annualised return: 24.40% (at March 31, 2011)
Annualised volatility: 13.03% (at March 31, 2011)
Sharpe ratio LTD: 1.52 (at March 31, 2011)
Strategy: directional high conviction

Share classes: US dollar, euro, sterling and Swiss france
Administrator: Citco Fund Services (Ireland)
Auditor: Ernst & Young

Prime brokers: Barclays Capital Securities, Credit Suisse Securities (Europe), Goldman Sachs International and Morgan Stanley & Co International
Legal counsel: Allen & Overy (English and US law); Seward & Kissel (US law); Maples and Calder (Cayman law)
Domicile: Cayman Islands
Management fee: 2%
Performance fee: 20%
Minimum investment: $1 million
Lock-in: none
Redemption/liquidity terms: monthly with 180 days’ notice