PFGBEST.com has launched Peregrine Asset Management Inc., a strategic asset management initiative that will offer futures-based alternative investments at lower minimum investment levels than typical managed account programs.
Neil Aslin has been named president of the new venture, which will seek emerging commodity trading advisors (CTAs) and create commodity pools to offer numerous CTAs strategies in one structure. Aslin says the program began in 2005 and the new structure formalizes their goal of creating sustainable investments for retail traders.
Everyone has heard the surveys that show somewhere around 90% of all futures accounts bust out. PFG has attempted to improve the odds for retail traders by developing relationships with emerging CTAs and offering them in a pooled vehicle.
“We try and structure products using multiple advisors. We put together groups that are non-correlated both in terms of markets and performance,” Aslin says. “Our objective is to produce returns two times the history of the S&P at the same level of volatility,” Aslin says. “Finding CTAs is not difficult. The ones we are interested in we give proprietary money to manage and we incubate them.”
Their first go around was successful. The Pecta Fund, which was launched in December 2005 and is closed to new investments, has produced a compound annual return of 20.75% with an annual standard deviation of 6.7%. The standard deviation of the S&P 500 during the same period was 14.99%.
Aslin says it is a good time to be offering alternative investments given the way equities have performed of late.
“People are going to take more of a look at alternatives. There is so much about equities that are confusing,” Aslin says, adding, “When this thing settles down, the diversification of your money into different asset groups is going to be an exercise that many people will look at.”
Hedge fund redemptions
Hedge Fund Research (HFR) reported in October that the size of the hedge fund universe shrunk by $210 billion in the third quarter due to “steep performance losses and record investor capital redemptions.”
HFR gauged the size of the hedge fund universe to be $1.72 trillion at the end of the third quarter, down from $1.93 trillion at the end of the second quarter. The HFRI Fund Weighted Composite Index dropped 8.85% in the third quarter and is down more than 10% on the year. It would be the first negative year for hedge funds since 2002.
Managed futures, despite performing relatively well during the recent market turmoil, also have seen redemptions. Barclay Hedge reports that managed futures’ money under management dropped to $227 billion in the third quarter from $234.1 billion in the second quarter.