Low volatility a Basis for top rating

Consistentperformance combined with low volatility enabledBasis Capitalto be rated the topInvestorWebsix star fund manager for hedge funds.

InvestorWeb investment analyst Ben Davis says that over the past two years, Basis has had an average return of over 13 per cent, with only 2.6 per cent volatility.

It was these positive returns, seen in 90 per cent of months over the past three years, that saw it rated aboveColonial First State Investments(CFS) andBT Financial Group.

The team is made up of individuals who have had solid track records in hedge and capital markets domestically and abroad, and Davis considers this another key strength of the manager.

Davis says that Basis’ research and investment process is very complicated, unique and specialised, and requires a high level of expertise to make it work.

The process is a combination of three strategies, including a credit strategy, encompassing long and short investments across all forms of credit products, a balanced strategy, focusing on investments in long convertibles, exchangeables and preference shares, and a hedged strategy searching for “cheap” volatility.

Davis says although Basis is not yet widely recognised in the financial adviser market, it is highly regarded among its peers in hedge fund investment management and is looking to move into the retail market soon.

CFS employs a fund-of-fund investment strategy, with its hedge funds reducing the risk of its investments. Davis says its key strengths are its team and its disciplined approach to choosing underlying hedge fund managers.

BT Financial Group, the other finalist, outsources the management of its hedge funds to Grosvenor Capital, one of the oldest hedge fund managers in the US. Davis says the rating stems from Grosvenor’s conservative approach to selecting underlying hedge fund managers, up to 60 managers in its portfolio, and average returns of over 10 per cent for 10 years.