05 August 2024
Quilter Investors, the multi-asset investment business of Quilter, has announced it is adding a hedge fund replication strategy to its Cirilium Passive Portfolios.
The portfolio managers have chosen to introduce the Goldman Sachs Absolute Return Tracker fund to the Passive portfolios, the first time an alternative passive fund has been used in the range. This is part of the recent changes to the strategic asset allocation of the range which made Quilter Investors one of the first portfolio managers to offer financial advisers and their clients’ exposure to alternatives in a passive fund of funds structure.
These strategic asset allocation changes mean the Cirilium Passive portfolios now have access to a wider investment universe, but crucially at no extra cost for clients.
The Goldman Sachs Absolute Return Tracker fund is a diversified, multi-strategy portfolio that invests long/short across equities, bonds, currencies, credit, and commodities. It offers daily liquidity with full transparency of positions. The aim is to replicate the performance of an aggregate of the hedge fund industry - based on the performance of 3,000 hedge funds.
The alternatives allocation is around 7% for the four risk profiles from Conservative to Dynamic but the asset class is not held in the Cirilium Passive Adventurous Portfolio, which is invested solely in equities.
Quilter Investors is also in the process of seeding a new passive alternatives fund from another major asset manager for use within the Cirilium Passive portfolios, and this will be announced and added in due course.
Elsewhere within the Passive portfolios, four new funds have been added to reflect the fixed income element of the strategic asset allocation becoming more granular. Previously a single broad fixed income index was used, but by breaking this down into four component parts it allows the team more freedom to vary the weighting between these sub-asset classes to target the best risk and return opportunities as identified by the strategic asset allocation. As such, the Vanguard Global Corporate Bond Index Fund, the Vanguard UK Investment Grade Bond Index Fund, the Amundi JP Morgan GBI Global Government ETF and the Amundi UK Government Bond ETF have all been added to the range.
Sacha Chorley, portfolio manager at Quilter Investors, said: “We always want to improve our product offering to help deliver strong and consistent returns. The broader array of investments now available mean we can expand the range of asset classes in the Cirilium Passive portfolios. At this point it means adding alternatives to the portfolios in the form of hedge fund replication strategies, but further down the line there could be more additions too if we believe it would improve risk-adjusted returns for clients.
“Hedge fund exposure is not widely available in passive fund of funds, but we believe multi-asset portfolios across active, passive and blended strategies should have all the tools at their disposal to enhance diversification to help portfolios perform well in a variety of market environments.
CJ Cowan, portfolio manager at Quilter Investors, added: “We have been really impressed by the team at Goldman Sachs and the processes they have in place for this strategy. It is a highly liquid and transparent tracker fund and will provide diversification to the traditional equity and fixed income asset classes.
“Our scale gives us great opportunities to work with other asset managers to launch new funds. Alternatives is such a diverse and interesting asset class which brings a number of benefits to portfolios, and we are proud to be able use our existing relationships to find new ways to help deliver good outcomes.”
