MAN IP 220 Series 6: Man Investments

Best Performing Capital Protected Fund of Hedge Funds: Winner

Man IP220 Series 6 is the latest vehicle in a seasoned product set with a track record of delivering positive returns through the cycles over the last twelve years.

The first product in the family has returned on average 13.4% per annum over the last 12 years, often delivering strong returns when traditional investments were falling. And it has done it whilst offering investors a full capital guarantee on their initial principle investment.

The credit crisis was a stark reminder for investors of just how volatile and unpredictable markets can be. It also emphasised the risks of investing solely in one asset class.

"The financial crisis and the response to it were of unprecedented magnitude. One of the effects of the deleveraging and the government response - two powerful and opposing forces - is large, correlated moves across asset classes," says Herbert Item, chief investment officer at Man Investments.

That thinking underlined the development of this latest Man IP220 capital protected fund of hedge funds. The fund has a target double digit return per annum for an annualised volatility of 15% to 17%. The target investment exposure is around 160% of NAV.

It also offers capital security and potential profit lock-ins through a diversified portfolio. It offers monthly liquidity in a capital guarantee structure, with the guarantee secured by Deutsche Bank.

Liquidity has been a key consideration in constructing the fund's portfolio. Man points out that it has not had to impair liquidity in any retail product during the difficult conditions experienced this year and last.

The underlying portfolio is designed to be complementary, allocated to AHL, Man's flagship trend following CTA portfolio, and to a diversifying multi-manager portfolio, historically managed by Glenwood.

With over 100 investment professionals, AHL is focused on providing a range of systematic, managed futures products. "The firm was founded in 1987 and has grown into a world-leading quantitative investment manager with an extensive history of performance and innovation," says Anthony Lawler, co-head of portfolio management for Man Investments and lead portfolio manager for the IP 220 series.

Glenwood is part of the Man Group's recently merged multi-manager business, created this year when it combined with RMF and MGS under the Man brand adding to a structure that now spans convertible bonds, leveraged finance vehicles and structured products, as well as fund of hedge fund portfolios.

"The key to the success of the multi-manager portfolio lies in active, dynamic portfolio management, focus on factor analysis and selecting managers from a high quality approved list to reflect the investment views of the Asset Allocation Board," says Lawler.

Liquidity, transparency and control are fundamental to the portfolio management philosophy and to achieve that Lawler is increasing the allocation to separate managed accounts in the portfolio.

The strategy has delivered near double digit returns for low risk from around 50 underlying fund managers, trading across the full spectrum of hedge fund styles.

The portfolio mix assembled within the Man IP products provides a strong diversifier to traditional assets with a low correlation to equities. The longest running Man IP220 product produced positive returns of 9.2% in 2008, against a fall of nearly 40% in the MSCI World equities index.

FUND FACTS: MAN IP 220 SERIES 6

Full name of fund: Man IP 220 Series 6
Name of lead portfolio manager: Anthony Lawler
Name of investment/management company: Man Investments
Launch date: November 2008
Assets under management: $377.05 million
Annualised return: 13.4%
Annualised volatility: 17.4%
Administrator: Citi Hedge Fund Services
Auditor: Ernst & Young (Bermuda)
Custodian: Bank of New York Mellon
Domicile: Bermuda
Listing: Channel Islands Stock Exchange
Minimum investment: $50,000
Lock-in/up: none
Redemption period: monthly with notice 15/16 days notice