Brevan Howard wins shareholder support
A listed fund that allocates money to products managed by Europe's largest hedge fund has won a shareholder vote on its survival, in what a broker to the sector said marked a decisive break from a year that saw a string of bad news from the sector.
The vote by shareholders to continue their commitment to the £619m (€674m) BH Global fund was "pretty overwhelming and a real endorsement" said Mark James, executive director on the alternative investment funds team at RBS.
The ballot on the fate of the third-largest listed hedge fund was automatically triggered, after the prices of its three share classes – dollar, euro and sterling – lagged the per-share value of its investments for an extended period. In the vote yesterday, over 95% of those casting ballots opted to continue.
Lord Turnbull, BH Global's chairman, called the vote "an acknowledgement of the fact that the company is doing very well; the vote was a reflection of an event that happened last year, when investors lost faith in all asset classes, not just hedge funds."
BH Global's shares fell by 26% after listing in May last year, but they have risen by 40% so far this year. The fund invests in a number of unlisted products run by manager Brevan Howard Asset Management (that has $24bn of assets under management), including portfolios focused on Asia, equities and the firm's flagship Brevan Howard fund.
After the falling share markets and investment losses in the listed sector during 2008, there has been a string of continuation votes this year.
At one of these ballots, on the CMA Global Hedge last month, voters decided to wind the fund down – on the board's own recommendation. However, with Goldman Sachs Dynamic Opportunities, Dexion Capital's Absolute, Equity Alternative and Trading funds, and the BlueCrest Capital Management's AllBlue fund – among others – shareholders voted to continue.
Dexion was forced to propose the restructuring of its Alpha Strategies fund and refocus its investment remit. It has now been renamed Dexion Commodities and continues to trade.
The backing for BH Global may, in part, reflect the fact that the discount of its share price to its net asset value has narrowed from highs of around 33% over the past 12 months to about 8% now, according to RBS.
On average, listed hedge fund shares have risen by 43% this year and investments that the sector has made have also risen, by 17%, RBS said.
If BHAM closes its $15.8bn (€10.6bn) flagship global macro fund (the Brevan Howard fund) to new money, only the BH Global, and BH Macro funds – the latter investing in the flagship fund exclusively – will provide (indirect) access for investors.
Last year the BH Global fund made 21%, said investors, while data providers Hedge Fund Research registered a 19% fall across the broader industry. This year the fund made 14.4% by the last week of August, investors said.
– Write to: dwalker@efinancialnews.com
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