Distinguishing Features of the Fund

Hedge Funds typically charge a 2% Management Fee and a 20% Performance Fee. Fund managers can make a handsome profit from a 2% Management Fee. These managers may not be sufficiently incentivised to earn a Performance Fee. At 1.25% we have reduced our Management Fee down as much as possible whilst ensuring our business remains viable.
How you benefit: Your Management fees are genuinely being used for the management of our business. They are not being used as a profit generation tool. We are required to deliver performance to make a profit.
The Zen Capital Management Global Fund S.P. is one of very few funds in the world whose Performance Fee is subject to both a High Water Mark and a “hard” Hurdle. We do not believe you should pay us to barely outperform the return you can earn on your cash.
How you benefit: You only pay for real performance. If we do not deliver you a real return on your invested capital then no Performance Fee will be payable.
A "soft" hurdle means the performance fee is calculated on all the fund’s returns if the hurdle rate is cleared. A "hard" hurdle is calculated only on returns above the hurdle rate. Source: http://en.wikipedia.org/wiki/Hedge_fund
Because of the illiquid nature of the investments within many funds, “gating” is often applied to cap redemptions at say 20% of the fund’s Net Asset Value per year. This means investors sometimes have to wait several years for redemptions to be fully paid-out. Furthermore, in addition to a buy/sell spread, penalty fees are often imposed for exit within the first 3-5 years.
How you benefit: If you want (or need) your money we will not impose unreasonable costs nor delays.
There are some situations beyond our control which could result in delayed redemptions. Please see the Private Placement Memorandum and Private Placement Sub-Fund Supplement for details.
A key objective of Zen Capital Management is to hedge portfolio risk. As such, the Zen Capital Management Global Fund S.P. can be considered a true “hedge fund”. This is in distinct contrast to the majority of competing “hedge funds” which are actually equity funds.
How you benefit: The returns we generate are expected to have a low correlation with the major equity indices, and a low correlation with your other hedge fund investments.
The HFRI Equity Hedge Index, which tracks 2,400+ Hedge Fund managers, is one of the most widely referenced Hedge Fund indices in the world. A recent study by Morgan Stanley revealed the correlation between the HFRI EH Index and the S&P500 has risen to all-time high of almost 90%. Thus means the majority of managers are simply holding the major constituent stocks within the S&P500 index. Source: Morgan Stanley Investment Perspectives, November 28, 2011, Page 16. Source: http://www.scribd.com/doc/77460503
We have been evolving our proprietary system for over a decade through the most challenging market conditions of our generation. This system allows us to identify trading opportunities using a consistent and repeatable approach; to manage the risk associated with existing positions; and to exit positions in response to changing cyclic trends. It also allows us to monitor and control the overall volatility of the portfolio. It is this system which gives us our unique “edge”.
How you benefit: Our system-driven approach removes the human biases which lead to poor investment decisions. We apply a consistent approach to the selection and management of each and every position, and of the portfolio as a whole. You can expect our investment approach to remain consistent for the life of the fund.
We only invest in highly liquid, exchange-traded securities consisting predominantly of index and commodity futures, exchange traded funds and stocks. We also invest in highly liquid currency pairs traded in the global interbank market. Occasionally we may invest in other exchange-traded instruments such as options.
How you benefit: By investing in highly liquid instruments we are able to quickly place newly contributed capital and are readily able to meet investor redemptions. This approach also allows us to minimise the transaction costs borne by the fund.
We have invested significant time and capital over the last decade into the development of the proprietary tools used exclusively by Zen Capital Management. Furthermore, we have invested in the business of Zen Capital Management Pty Ltd and a significant portion of the founder’s personal liquid wealth is invested in the Fund.
How you benefit: If you do not make a return on your invested capital then we do not make a return on the time and capital we have invested over
Many funds management businesses have multiple funds and/or businesses to manage. The sole purpose of Zen Capital Management Pty Ltd is to advise the Zen Capital Management Global Fund S.P.. We do not have other funds nor businesses which distract us from this purpose.
How you benefit: Your investments have our full and undivided