Investment Team Insights: Mint Diversified Alternatives Fund

Kirsten Boldarin, Head of Distribution at Mint Asset Management joins Marek Krzeczkowski, Portfolio Manager, and Ryan Falls, Senior Analyst, to talk about their new Diversified Alternatives Fund.

Kirsten: You’ve launched a new fund the diversified alternatives fund. Marek, do you want to tell us a little bit about that?

Marek: Sure, so the fund is really looking to give investors access to something different so if you think about traditional bonds and equities here, we are bringing a number of alternative asset classes in one product.

Kirsten: So what sort of exposures will that provide investors, Ryan?

Ryan: We will provide exposure to global strategies, so we categorise these into three different buckets. Firstly, we have a hedge fund category, then we have event-driven, and then also we have your traditional bricks-and-mortar type alternative assets within hedge funds. In these categories, you have things you'd expect, such as global macro event-driven strategies. Within the alpha-driven category, we have things like private equity and absolute return. Then within the traditional bricks and mortar, we have things you'd expect such as property, infrastructure, and renewable energy.

Kirsten: So the fund is going to offer daily liquidity, and Ryan mentioned a number of different asset classes there that are typically illiquid. How are you intending on providing daily liquidity?

Marek: Yes, that’s a great question. Liquidity is very important for this product so we are accessing daily liquidity by buying into listed investment trusts globally. For some asset classes where we can't find listed products, we have direct relationships with fund managers, but all underlying funds have a daily liquidity.

Kirsten: And return expectations what would investors expect to gain from a product like this?

Ryan: Well historically we've done some back testing on the strategy and what we see is it comes out similar to how global equities have done over the last five years. However, going forward we have an expectation that will be slightly lower relative to your equity expectations, so we see it as somewhere between bonds and equity. The key thing to realise is that we have a higher return for a better adjusted level of risk, so effectively the risk-adjusted return is quite attractive relative to bonds or equities.

Kirsten: Marek, how would it fit into a traditional portfolio and what are the advantages of allocating to the fund?

Marek: Firstly, when you add an alternatives fund to your bonds and equities, you gained real diversification benefits, as this is lowly correlated with other asset classes. The benefit of our fund is that we do all the hard work, we select underlying asset classes, we appoint managers, and then we manage the portfolio using a risk model. This is to make sure that each of the underlying asset classes contributes to the risk of the overall product in an equal way.  So really that management piece from us is, I think, very important.

Kirsten: So it's a liquid strategy and also a PIE fund?

Marek: That is right so you have the benefit of PIE Fund and therefore tax efficiencies.

Kirsten: Is there anything similar in the New Zealand market at the moment?

Ryan:  We've done some market research into other offerings out there, but at the moment we can't see anything comparative to what we're offering in terms of global access and access across different alternative asset classes.

If you like to find out more about the Mint Diversified Alternative Fund please visit the fund page.