Liquid Alternative Investments and Hedge Fund Strategies: an Interview with Robert J. Murphy, Chief Investment Officer and Portfolio Manager for the Hatteras Alternative Mutual Funds

Wall Street Transcript

67 WALL STREET, New York - September 12, 2012 - The Wall Street Transcript has just published its Investing in Technology and Other Strategies Report offering a timely review of the to serious investors and industry executives. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Investing in Technology - Bottom-Up Investing - Price Discrepancies - Alternative Investing - Small-Cap Investing

Companies include: Hatteras Alternative Mutual Funds and many others.

In the following excerpt from the Investing in Technology and Other Strategies Report, an experienced portfolio manager discusses his investment philosophy:

TWST: Please start by introducing our readers to Hatteras Funds with a brief history and overview of the firm.

Mr. Murphy: Hatteras Funds provides unique alternative investment solutions for financial advisers and their clients. The firm was founded in 2003, and we work out of our headquarters in Raleigh, N.C. We also have an office in New York City. We focus only on alternative investment solutions and only on financial advisers. We offer solutions for financial advisers to help allocate their clients' portfolios to alternative investments.

I am the Chief Investment Officer of the Hatteras Alternative Mutual Funds. In the summer of 2009, Hatteras Funds entered into an agreement to acquire Alternative Investment Partners, adviser to the alternative mutual fund family, and we began oversight of portfolio management shortly thereafter.

The funds look to provide access to multiple hedge fund strategies utilizing multiple hedge fund managers in a mutual fund structure. Simply, our multistrategy fund, Hatteras Alpha Hedged Strategies Fund, seeks to provide highly correlated returns to the HFRI Fund of Funds Composite Index, and we look to generate alpha through manager selection and portfolio construction over a full market cycle.

TWST: Is that the fund you would like to focus on today?

Mr. Murphy: It's the flagship for the mutual fund family. We also offer access to long/short equity and long/short debt strategies through standalone funds. But, it started with the multistrategy, multimanager fund that we call the Alpha Hedged Strategies Fund, ALPHX, which celebrates its 10th anniversary this month.

TWST: Would you give us a snapshot of that fund in terms of holdings, size, strategy, etc.?

Mr. Murphy: The entire Hatteras Alternative Mutual Funds complex is approximately $688 million in assets under management. Of that, the Alpha Hedged Strategies Fund is comprised of approximately $480 million. The Alpha Hedged Strategies Fund is a publicly offered, daily liquid, fully transparent 1940 and 1933 Act-registered mutual fund that invests in a series of underlying funds, all of which are likewise daily liquid, fully transparent and 40 Act-registered. The underlying funds are divided by hedge fund strategy and include long/short equity; market neutral; relative-value long/short debt; event driven; and managed futures.

We provide access to true hedge fund managers by opening up a separate account for each manager. Here they are able to implement their strategy alongside their LP structured product, while Hatteras maintains complete control of the assets.

TWST: Are there any overall trends you would point out in particular that you're seeing in the area of alternative investments?

Mr. Murphy: The overriding trend is the increased attention on liquid alternative investments and how to access hedge fund strategies, which were previously reserved for ultra-high net worth individuals and institutions that were investing in LPs or other locked-up private structures without changing the client's liquidity constraints.

TWST: Are there particular kinds of assets or areas within alternative investments you find promising right now?

For more from this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers, and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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