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RFP: Irish Investor in Search of Tail Risk Mitigation

Report: Systematic Strategies

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Stockholm (HedgeNordic) – An Irish institutional investor seeks an overlay manager or managed options strategies to mitigate tail risk in its €2.5 billion fund-of-funds portflio. This includes €1.1 billion in long-only equity exposure and €800 million in long-only fixed income exposure. The primary goal is to safeguard against potential equity downturns and economic recessions, as well as unforeseen grey swan and global macro events. According to an update, the investor can consider CTAs that can perform well in periods with weak equity or fixed income markets.

Additionally, careful consideration must be given to the resurgence of inflation and its implications in a recessionary environment.

Search Criteria

  • Universe: The client is looking for managers/strategies to help mitigate tail risk across their exposures:
    • Long Only Equity – c.€1.1bn
    • Long Only Fixed interest – c.€800m
  • Objective:
    • The priority is to protect against a recession and a fall in Equities, as well as to consider grey swan and global macro events. Consideration needs to be given to the resurgence of inflation and how this may also play out in a recessionary environment. Consideration is also required for the portfolio’s exposure to bonds.
    • A holistic approach to Equity, Credit Risks and other tail risks is also of interest, i.e. a combined solution.
  • Style: Portfolio overlay/Managed Options
  • ESG: Not a high priority, the Fund of Funds is overall Article 6.
  • No direct leverage (other than related to the use of derivatives if applicable)

Minimum requirements

  • UCITS aligned strategy/solution (Hard requirement) 
  • UNPRI signatory
  • Minimum track: 5 years of running similar mandates

Other criteria

  • AMC: the investor is giving forward guidance of a target fee range of 50-60bps; however, they are prepared to consider slightly higher fee structures for exceptional products. The strategy holds no investments above 100bps.
  • Strategies which include Performance Fees will not be considered.

Investment vehicle

  • Fund or ETF or via SMA that aligns with UCITS rules on liquidity, transparency and custody.
  • Domicile: Dublin or Lux
  • Daily pricing
    • Close of business unit prices need to be received by 10 am the following morning.
    • Intra-day prices can be used in the calculation of the NAV price.

Process outline

  • Shortlisting during Q3
  • Implementation Q3/Q4

July 29, 2024 (Cut-off: Midnight CET, Expiry date inclusive)

To review the search and apply, asset managers need to register here on globalfundsearch.com


Please contact support@globalfundsearch.com

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Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

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