Raising $1.1B, Arden Upbeat on 2014

Chidem Kurdas

A surprising success in a market environment that did not favor hedge fund strategies, a multi-manager mutual fund launched by Arden a year ago took in about $1.1 billion.

This suggests the mass affluent may have an appetite for alternative investments even when these are overshadowed by big stock market gains.

Arden catered to institutions for most of its 20-plus years but in 2012 started to move into the mutual fund sector. Its novel product employs hedgies to implement selected strategies in building a portfolio of equities, bonds, futures, swaps and other derivatives. The object is make returns relatively independent of – or uncorrelated to – market direction.

But in 2013 such returns were puny compared to the steep rise of stocks. The Arden fund made about 5.4%, which beat the relevant hedge fund benchmark but pales relative to the 30% gain in the S&P 500 index.

Arden told customers that this unusual environment – the S&P rose 30% or more in only three years since 1960 – will not persist and with the Federal Reserve ending the extraordinary monetary stimulus, there will be better opportunities for hedge strategies in 2014.

Event-driven investments, a large contributor to the fund’s profit, are expected to continue performing well as corporations pursue spin-offs, breakups, acquisitions, joint ventures and restructurings.

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