As the funds industry continues to embrace passive management, more and more DFMs are looking to answer the question of how to get exposure to alts in a passive form.

Well, Quilter has started using a passive hedge fund product in their Cirilium passive range for the first time. 

This takes the form of the Goldman Sachs Absolute Return Tracker, which has expanded the investment universe of its passive portfolios by diversifying into a third asset class at no extra cost to their clients. 

“Hedge fund exposure is not widely available in passive fund of funds, but we believe multi-asset portfolios across active, passive and blended strategies should have all the tools at their disposal to enhance diversification to help portfolios perform well in a variety of market environments,” said Sacha Chorley, portfolio manager at Quilter. 

Indeed the fund’s aim is to replicate the performance of 3,000 hedge funds in aggregate – thus eliminating the risk of manager selection. 

Naturally this issue is all the more pertinent for hedge funds as they test managers’ ability to add value through their skill alone, largely independent of wider market conditions. 

So by going passive it at least removes the need to make some difficult phone calls.

Quilter are not stopping there either – the team added that they’ve seeded another passive alternatives fund in this growing product universe, which will be announced soon. 

Not long ago we reported that Arbuthnot Latham has recently bought into a passive semiconductor fund in their latest rebalance: iShares MSCI Global Semiconductors, to be precise.

Since then, Nvidia has withdrawn significantly from its all-time high, though the private bank sees accessing the semiconductor supply chain as the cleanest way to participate in the artificial intelligence theme.