Mint Asset Management has rolled out a multi-asset fund offering access to nine underlying alternatives strategies at the outset.
Marek Krzeczkowski, Mint portfolio manager, said the new Diversified Alternatives Fund was likely the first-of-a-kind to include a panel of sophisticated hedge-style investments in a retail-friendly PIE setting.
At launch, the Mint product currently invests into nine funds – mostly listed in the UK – that have low correlations with each other and traditional asset classes.
Krzeczkowski said as well as introducing a new level of diversification to portfolios, the alternatives blend has a historically shown a defensive bent during market drawdowns based on back-testing.
“This is not an absolute return fund but in periods where markets have been under stress it has performed well,” he said.
From a potential pool of 60 or so alternative asset classes, Mint landed on nine to start with (the number may change over time) after screening for correlations, performance (historical and forward-looking) and, importantly for PIE fund purposes, liquidity.
“We had a strong focus on liquidity,” Krzeczkowski said. “All underlying funds are either listed or have daily liquidity.”
Despite the liquidity constraints, the Mint strategy taps into a wide spectrum of alternatives including hedge fund standards such as global macro, event-driven and absolute return through to the more esoteric ‘intellectual property’ option.
The Mint ‘liquid alternatives’ menu also covers renewable energy, infrastructure, property, private equity and managed futures (or trend-following).
Selected managers had to have a consistent track record of a minimum five years and top quartile results with performance clearly linked to the target asset class.
For example, the starting line-up includes the Australia-domiciled PIMCO Trends fund (managed futures) and the UK-listed HG Capital Trust for private equity exposure.
Putting the fund together has been a more than two-year process but the multiple moving parts will require rigorous ongoing maintenance, Krzeczkowski said.
He said Mint would track performance daily with intensive scrutiny on large price movements while rebalancing the fund monthly using a sophisticated multi-factor risk model.
As well as rebalancing the fund in line with target allocations, Krzeczkowski said the monthly refresh would also take account of any correlation movements between the various alternative assets and funds.
Mint has also scheduled regular quarterly checks of underlying funds and third-party due diligence and an annual review that takes in asset class assumptions, manager line-ups and research updates.
Carrying an estimated all-in estimated annual fee of 1.85 per cent (including the 0.65 per cent Mint fee), the Diversified Alternatives fund is 100 per cent to the NZ dollar and benchmarked against the HFRI Fund of Funds Index.
Seeded with staff money, Krzeczkowski said Mint had already received interest from several different advisory groups ahead of the official launch.
“We think having a multi-asset liquid alternatives fund in a tax-effective PIE structure will be attractive to many investors,” he said.