Fund manager Select Asset Management's Alternatives Portfolio has made a 3 per cent initial allocation to York Capital Management's Asian Opportunities Fund.
York invested in both equity and debt of underlying companies in the region in order to take advantage of the full opportunities available, Select head of portfolio management Robert Graham-Smith said.
"Our allocation to the manager's Asian event-driven fund reflects our positive outlook on corporate activity in the Asian region based on continued economic growth plus the healthy state of many corporate balance sheets and the ability of the manager to profit from some inherent market inefficiencies," Graham-Smith said.
"While Asia represents approximately 25 per cent of global gross domestic product and equity market capitalisation, inefficiencies remain through less coverage by banks and analysts and there has been a huge reduction in capital deployed in the region by banks and hedge funds since the global financial crisis, although this trend is reversing again.
"Prior to the addition of York, we had relatively little event-driven exposure in the Select Alternatives Portfolio, with the majority of existing exposure derived through AQR Delta and Och-Ziff, and mostly represented through US markets."
He said York was a well-established hedge fund manager with a strong 19-year track record of event-driven investing in its global multi-strategy fund and a five-year track record in the Asian fund.
"The manager has demonstrated the ability to adjust exposures to equity and credit and across sub-strategies over various parts of the market cycle over several cycles - a strong feature versus many peers with much shorter track records," he said.
The Select Alternatives Portfolio returned 11.8 per cent in calendar 2010.
