Fund Focus #2 – Alternative Investment Strategies Ltd

From World Alpha

Just when you thought hedge funds were becoming mainstream, the government raises the bar and places them out of reach for the vast majority of Americans. The SEC voted unanimously to propose raising the minimum financial requirements for entry into hedge funds to $2.5 million in net worth, excluding primary residence. Under current rules, an individual must have at least $1 million in net worth(including residence) or annual income of $200,000 to qualify. The proposal will be open for public comment over the next two months before a final policy is adopted.

Likely, this ruling was in part influenced by the blowup at Amaranth. This rule would place hedge funds out of the reach of even more investors. However, as readers of this blog understand, there are plenty of great opportunities trading on the exchanges of the world that do not require the net worth requirements listed above.

We consider the fund below to be a great option.

Alternative Investment Strategies Ltd
Listed: London
Assets in Fund: ~$240M
http://www.aisinvest.com/
Current Share Price: $137
AvgVolume Last 50 Days: ~300,000
UK: AIS

AIS was initially listed on the London Stock Exchange in 1996, and is managed by International Asset Management (IAM). (IAM has been in existence since 1989, but was acquired by ABN Amro Asset Management in 2006). The management fee is a standard 1% of assets, and 10% performance fee of new gains.

AIS invests in between 20 and 40 funds – with a bias to long/short funds – and no single fund representing more than 10% of the gross assets of AIS at the time of investment. Some of the top names in the portfolio include Eminence, Karsch, and Renaissance Equities Fund.

Performance since 1996:

Equities = MSCI World
Bonds = Citi World Govt. Bond Index

The fund has not had a down year since inception in 1996. Returns have averaged ~10% with a maximum drawdown of around 10%.

http://worldalpha.blogspot.com/