Charlotte Valeur is the nonexecutive chairwoman of LSE-listed BH Credit Catalysts Limited. She recently sat down for an interview with Bloomberg’s Will Wainewright (and published in BloombergBriefs) about the publicly-traded fund, which gives retail investors in the U.K. a chance to invest in Brevan Howard Asset Management LLP’s largest credit fund.
Of note, the $228 million fund has returned just under 6% through September of this year. The Guernsey-based fund was launched on Oct. 19, 2010.
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Listed hedge fund is ideal method for retail investor to get into alternatives
Charlotte Valeur was unequivocally positive when asked if listed hedge funds are an appropriate way for retail investors to get some exposure to alternatives. She replied: “…from my point of view, sophisticated strategies like BH Credit Catalysts are better to offer for retail investors because they benefit from an independent board of directors. We ask questions of the fund managers, we make sure everything is safeguarded. We speak to risk managers to make sure there is no style drift. All of that we do as a board to give investors some level of security that there is oversight of the fund. Our main job is to secure their money.”
Charlotte Valeur’s BH Capital Catalyst fund up 6% through September 2014
When asked to explain where most of this year’s 6% return to date in the fund has come from, Charlotte Valeur replied, “Mortgage-backed securities, which has around 40 percent of the Master Fund’s allocation and has its own trading team. The other big area of focus for the fund, also with its own trading team, is corporate credit. More generally, the Master Fund has an opportunistic credit mandate investing across asset backed, securitized and corporate credit investments. The fund has an active short book and in all cases, the teams focus on catalysts, both fundamental and technical, that materialize within three to 12 months.”
Ongoing changes in corporate governance
When asked to briefly discuss recent trends and changes in fund governance, Valeur highlighted both board diversification and board succession planning.
“What is happening is diversification of boards. That is being pushed very hard and I think that is right. The industry needs a broader group of people on boards with a smaller number of appointments each, with proper understanding. Fund governance is not rocket science but people do need to understand it. Board succession planning is virtually non-existent; I think all boards should have one.”
Financial regulators wary
Charlotte Valeur also notes that financial regulators remain wary of mixing hedge funds and retail investors. She explains the problem: “The regulators are not that happy with hedge funds being offered to retail investors. The problem is that as soon as you list something, it is available to everyone, but there are strict promotion rules in place.”