The Holland Hedge Fund Tracker (‘the tracker’) is a Finles Capital Management initiative and is aimed at attracting more institutional capital for Dutch hedge funds and putting the Netherlands on the map as an international centre for this dynamic global investment category. The aim of the tracker is to strengthen the local hedge fund talent pool in order to establish a world-class industry. Hedge funds based in the Netherlands have proven that they can match-up to foreign competition and achieve very good investment returns. This private business initiative is our way to support the Dutch industry and the goals of Holland Financial Centre.
The Tracker was launched 3 May 2010 as a Dutch onshore fund of funds and tracks the Finles/IEX Dutch Hedge Fund 25 Index. This new investible index is derived from the Finles/IEX Dutch Hedge Fund Index, which started with 17 hedge funds on 1 January 2009 and has 29 funds by June 2010. In 2009, the index’s total return was 11%. Both the Tracker and the indices are rule-based and fully transparent.
The 25 index is a smart index as it only includes funds with a professional fund structure. This 25 index is an incentive to the industry to be highly professional and institutional. For the funds included in the index, this will act as a stamp of approval.
Features of the Holland Hedge Fund Tracker
When determining whether a hedge fund qualifies for the 25 index, Finles undertakes a qualitative screening on 7 criteria. The funds that meet those criteria will be ranked based on: low TER, high AuM, good liquidity and low correlation to other asset classes. The higher a fund scores on these criteria, the higher its weight in the 25 index and thus the Tracker. Every year the ranking will be updated and communicated.
The incentives for the industry are therefore:
1. to lower the Total Expense Ratio
2. to increase the fund’s AuM up to the soft close level
3. to improve the liquidity terms to at least Monthly liquidity with 30 days notice for redemptions and
4. to provide a low correlation investment to equity and fixed income.
Why invest in the Holland Hedge Fund Tracker?
By investing in this product institutional investors achieve the following:
· You invest in a diversified portfolio of hedge fund strategies. with a very low correlation to equities and bonds.
· The index outperformed other global hedge fund indices like the HFRX and others.
· You invest through the Tracker directly in the underlying funds.
· You know exactly what you invest in, as the index is fully transparent.
· Very low cost structure, the first source of alpha.