Westbury Launches European Hedge Fund

by Carla Johnson, Investors Offshore, London

24 January 2002

Westbury Asset Management has announced the launch of the Westbury European Hedge Fund including $40 million seed capital from Swiss Life Hedge Fund Partners. The Fund is a new open-ended exempted company incorporated in the Cayman Islands, which will invest in a market neutral portfolio of developed European equities. The Fund is listed on the Irish stock exchange and has two share classes: US$ hedged and UK£ hedged.

Westbury describes the Westbury European Hedge Fund as a genuine market neutral European hedge fund that seeks to produce sustainable returns of 15% plus p.a. after fees and all other costs with single digit overall portfolio volatility and low correlation with broad equities and bonds. The fund is truly market neutral in the sense that once securities have been selected, the total portfolio is constructed so as to tightly control it for common sources of risk including but not limited to country, currency, sector membership, company size and valuation biases.

In order to achieve sustainable returns in excess of 15% the fund firstly uses a multifactor quantitative model to analyse differences in the pattern of expected versus realised return in Europe, and, then systematically exploits the behavioural biases that have led to these anomalies. The model is flexible in the sense that Westbury can act to ensure both the effectiveness of the necessary checks and balances and the responsiveness to changing market conditions; thereby providing robust investment process control.

Morgan Stanley acts a prime broker to this fund with Hemisphere as the administrator and Ernst & Young as the Fund auditor. Legal counsel to the Fund for English law is provided by the City Law Partnership and by Walkers for Cayman Islands Law. The fund enjoys monthly liquidity, charges an annual management fee of 1.5% and will earn a 20% annual performance fee subject to a perpetual "high watermark" and no hurdle.

Commenting on the launch, Simon Hookway, a founding partner of Westbury said:

"We are very pleased with the enthusiastic reception the Fund has received amongst investors but particularly with Swiss Life's involvement which we view as a clear validation of both the Fund and Westbury by one of the World's leading financial institutions"

Commenting on the Fund, Hans Tischhauser, CEO Swiss Life Hedge Fund Partners said:

"We were attracted to Westbury by the strength of the management team and rigorous investment process as well as the clear diversification benefits offered by the product."

Westbury Asset Management was established in May 2001 with the objective of setting up and managing innovative investment products delivering high quality returns with low volatility. The four founding partners of Westbury together have over 55 years of financial services expertise in asset management, investment banking and capital markets.

Westbury aims to launch innovative products spanning a variety of asset classes including equities, fixed income, property and private equity. Using the skills of the Westbury team and joining forces where appropriate with specialist providers of asset management services, Westbury's funds will enable investors to buy investments managed by a team of experts with the required skill, experiences and track record to succeed.

Westbury Asset Management is also in the process of launching the Westbury Property Fund Limited, a new Guernsey closed end fund, which will invest in a diversified portfolio of commercial property throughout the UK. The Fund will be listed in London and the Channel Islands. The anticipated size of the fund, including debt, is UK£245m.

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