KKR & Co. (KKR) has started a best ideas fund after concluding that the largest stock positions taken by individual managers performed better than other picks in the past decade.
KKR Prisma, a $10 billion unit that allocates money to hedge funds, created the strategy in January to invest in some of the highest conviction -- or largest -- holdings from 14 equity-focused hedge fund managers, according to a marketing presentation dated April 23 to the Alaska Retirement Management Board. The pension fund had $420 million with KKR Prisma as of March 15 and was scheduled to vote on whether to allocate as much as $100 million to the strategy.
KKR has been expanding into hedge funds, joining competitors Blackstone Group (BX) and Carlyle Group (CG) in broadening its business beyond leveraged buyouts. Prisma's assets have grown by more than $2 billion since KKR agreed to acquire it in 2012.
Kristi Huller, a spokeswoman for New York-based KKR, declined to comment.
KKR Prisma money manager Vishal Soni will oversee the new fund's allocation to individual managers, adjusting for risk and exposure to different sectors, currencies, and countries. The strategy targets returns of 8 percent to 10 percent a year, according to the presentation. KKR Prisma will change early investors a 1.25 percent management fee and a performance fee of 12.5 percent.
The KKR Apex Equity strategy "benefits from each manager focusing on a set of core competencies rather than one team trading across all sectors and geographies," the presentation said.
The single largest long positions of hedge fund managers gained more than other picks, KKR said in the Alaska presentation, citing research it had conducted on portfolios from 2004 through 2014.
The strategy is an extension of KKR Prisma's current investments in long-short equity managers. The unit had more than $3 billion invested with more than 40 managers that traded stocks as of Jan. 1, according to the presentation.
The firm recently turned the strategy into a standalone fund, according to documents filed with the U.S. Securities and Exchange Commission this month.
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