Article section
Kazuaki Kojima, Head of Albourne Partners Japan, was recently interviewed by J-MONEY Magazine for their Summer Issue.
The following extract has been translated from Japanese.
Kazuaki Kojima, Head of Albourne Partners Japan, emphasizes the importance of understanding portfolio risks and adjusting them accordingly in uncertain times. Hedge Funds, as relatively liquid strategies within alternative investments, allow investors to redeem and reallocate funds. Hedge Fund characteristics include strategic adaptability during market turmoil, flexibility in combining different strategies, and the ability to leverage position. April saw significant market volatility, yet Hedge Funds overall managed to preserve capital effectively. Albourne’s Hedge Fund Index (HedgeRS) recorded a 0.24% increase, with the Multi-Strategy delivering a 1.16% return.
However, Mr. Kojima cautions that during severe market disruptions, fund credit lines may shrink, forcing funds to reduce positions. Even well-performing funds may need to liquidate positions due to redemption requests, leading to unexpected losses. Additionally, strong-performing funds may sometimes be redeemed alongside underperforming ones, potentially opening opportunities for investment in popular funds that are typically closed to new capital. Mr. Kojima stresses the importance of maintaining investment candidate lists in stable periods, ensuring firms can react swiftly to such opportunities.
The Growing Popularity of Multi-Manager Funds
One of the fastest-growing investment structures in recent years is the multi-manager fund, where a single fund’s assets are managed by multiple investment managers using various strategies. Also known as the platform model, this structure allows the main fund to provide infrastructure and oversee risk management while individual managers focus exclusively on their strategies to achieve stable returns. Due to the strong and consistent performance of many such funds, investor inflows have accelerated in recent years.
However, Kazuaki Kojima warns that investors should pay close attention to fee structures and liquidity. Traditional Hedge Funds typically follow a “2:20 model”, charging a 2% management fee on assets and 20% performance fee on gains. In contrast, multi-strategy funds tend to have higher fees to secure top-tier managers and maintain advanced technological infrastructure. Additionally, pass-through fee structures—which transfer operational costs directly to investors—create fundamental differences between platform funds and traditional multi-strategy Hedge Funds, particularly regarding capital flexibility across strategies and netting constraints on position.
Ongoing Monitoring to Ensure Investment Strengths Are Being Maintained
Investing in Hedge Funds requires continuous monitoring and assessment. Mr. Kojima emphasizes key points to observe during the monitoring process, such as whether the manager's strengths are maintained or whether any unexpected risks are being taken. Additionally, he highlights the challenges of succession planning, as founders often manage Hedge Funds directly. Over time, as funds mature, founders may become more risk-averse, which could affect performance. While Hedge Funds generally offer liquidity, certain investment strategies may impose redemption gates, leading to delays in withdrawals. To avoid missing critical moments for adjusting investments, Mr. Kojima advises maintaining ongoing monitoring and identifying early warning signs to make timely decisions.
Right sidebar
Top Stories
