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Rating:BlackStone Enters Mutual Fund Biz Not Rated 3.0 Email Routing List Email & Route  Print Print
Tuesday, July 16, 2013

BlackStone Enters Mutual Fund Biz

Reported by Tommy Fernandez

What's with this industry? You turn away for a second and another firm wants to join in.

In this case though, it is the world's largest discretionary largest discretionary allocator to hedge funds with roughly $49 billion under management, Blackstone [profile].

Blackstone is entering '40 Act Country with the Blackstone Alternative Multi-Manager Fund (BXMMX).

The product managed by Blackstone Alternative Investment Advisors, will reportedly allocate assets among a variety of investment sub-advisers with experience managing non-traditional or "alternative" investment strategies. Blackstone may also manage a portion of the Fund's assets directly and may invest in unaffiliated hedge funds.

The 11 subadvisors are:

  • Two Sigma Advisers, LLC
  • Cerberus Sub-Advisory I, LLC
  • Credit Suisse Hedging-Griffo Servios Internacionais S.A.
  • HealthCor Management, L.P.
  • Caspian Capital LP
  • Boussard and Gavaudan Asset Management, LP
  • Wellington Management Company, LLP
  • Good Hill Partners LP
  • BTG Pactual Asset Management US, LLC
  • Chatham Asset Management, LLC
  • Nephila Capital Ltd.

    "Blackstone has spent the last three years analyzing and preparing to enter the market for liquid alternatives. Our research led us to believe that there are a few critical success factors that will separate the winners from the losers," stated John McCormick, senior managing director and head of Global Business Strategy for BAAM said.


    Company Press Release

    Blackstone's Hedge Fund Solutions Business Set to Launch an Open End, Daily Liquid, Alternative Mutual Fund



    NEW YORK -- Blackstone (NYSE:BX) announced that Blackstone Alternative Asset Management ("BAAM"), its hedge fund solutions business, will launch its first alternative investment-focused mutual fund that offers daily liquidity. BAAM, which is the world’s largest discretionary allocator to hedge funds and has approximately $49 billion under management, is developing this custom solution for a strategic investor by leveraging its longstanding relationships with some of the industry’s leading hedge fund managers.

    J. Tomilson Hill, Vice-Chairman of Blackstone and CEO of BAAM, said, "We achieved our status as a premier hedge fund solutions provider by preserving capital in the midst of volatile markets and by developing innovative solutions to meet our investors’ needs. We are delighted to enter this market and to offer a daily liquid product that provides portfolio diversification through alternative strategies that are designed to be uncorrelated with those of traditional asset classes."

    The Blackstone Alternative Multi-Manager Fund (the "Fund", Ticker: BXMMX) is a registered, open-end mutual fund that is managed by Blackstone Alternative Investment Advisors LLC. The investment objective of the Fund is to seek capital appreciation by allocating assets among a variety of investment sub-advisers with experience managing non-traditional or "alternative" investment strategies. Blackstone may also manage a portion of the Fund's assets directly and may invest in unaffiliated hedge funds.

    Through the use of alternative investment strategies, Blackstone seeks to provide low beta to equity and fixed income markets. The Fund’s multi-manager, multi-strategy structure will allow Blackstone to dynamically shift capital to take advantage of the team’s top-down market views with the goal of managing risk and generating alpha. Blackstone will employ the same disciplined investment process and will utilize the same experienced investment team that has long served its institutional clients.

    In describing this initiative, John McCormick, Senior Managing Director and Head of Global Business Strategy for BAAM said, "Blackstone has spent the last three years analyzing and preparing to enter the market for liquid alternatives. Our research led us to believe that there are a few critical success factors that will separate the winners from the losers. First, you have to provide access to leading investment talent. Our industry position and relationships allow us to offer access to a group of the highest-conviction hedge fund managers on BAAM’s roster — managers currently representing a significant amount of BAAM's capital on a dollar and percentage basis. Our track record of structuring value-added transactions has enabled us to secure this capacity. Second, significant investments in technology and infrastructure are necessary in order to operate effectively in a daily environment, subject to 1940 Act rules. Finally, you have to ensure that your manager due diligence and investment processes are consistent with those that have proven successful over time, and that the underlying strategies lend themselves to a successful transition to a daily, more highly-regulated environment."

    Stephen Sullens, Senior Managing Director and Head of Portfolio Management for BAAM, explained, "We approached the portfolio construction process by leveraging our extensive experience constructing custom solutions for sophisticated institutional investors. We are confident that we have identified hedge fund strategies and manager skill sets that translate well into a multi-manager solution in a 1940 Act framework. Investors in this product will benefit from the full breadth of Blackstone's manager due diligence and screening procedures, top down asset allocation views and ongoing portfolio management capabilities."

    BXMMX's Sub-Advisers include:

    Two Sigma Advisers, LLC
    Cerberus Sub-Advisory I, LLC
    Credit Suisse Hedging-Griffo Servi?os Internacionais S.A.
    HealthCor Management, L.P.
    Caspian Capital LP
    Boussard and Gavaudan Asset Management, LP
    Wellington Management Company, LLP
    Good Hill Partners LP
    BTG Pactual Asset Management US, LLC
    Chatham Asset Management, LLC
    Nephila Capital Ltd.

    All investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. The prospectus and, if available, the summary prospectus contain this and other information about the Fund. You can obtain a prospectus and, if available, a summary prospectus, from the SEC's website (http://www.sec.gov). All investors are urged to carefully read the prospectus and, if available, the summary prospectus, in its entirety before investing.

    Important Risks: An investment in the Fund should be considered a speculative investment that entails substantial risks; you may lose part or all of your investment or your investment may not perform as well as other similar investments. The Fund’s investments involve significant risks including, but not limited to, loss of all or a significant portion of the investment due to leveraging, short-selling, derivatives or other speculative practices. Other risks include, but are not limited to: allocation risk, conflicts of interest risk, counterparty credit risk, foreign investments risk, high portfolio turnover risk, liquidity risk, model and technology risk, multi-manager risk and volatility risk. See “Principal Investment Risks” of the prospectus for a detailed discussion of these and other risks applicable to the Fund.

    About Blackstone

    Blackstone is one of the world's leading investment and advisory firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, the companies we advise and the broader global economy. We do this through the commitment of our extraordinary people and flexible capital. Our alternative asset management businesses include the management of private equity funds, real estate funds, hedge fund solutions, credit-focused funds and closed-end funds. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com. Follow us on Twitter @Blackstone.

    Prepared by Blackstone Advisory Partners L.P., a member of FINRA and an affiliate of Blackstone Alternative Investment Advisors LLC, the investment adviser of the Fund.
     

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