This letter is to provide a factual response to the July 21, page 4 article: "Nashville drops 1st hedge fund of funds manager."
The article incorrectly states that FIS Funds Management Inc. was terminated by the Metropolitan Government of Nashville & Davidson County Benefit Board. In fact, it was FIS Alternative Investment Strategies Inc., a legally separate company, which was terminated. FIS-AIS is the general partner of the Lynx Fund LP, a hedge fund of funds.
There is no connection between Orim Graves' recommendation to Nashville while he was at Segal Advisors and FIS Funds Management hiring him. During the over one-year period between the Aug. 17, 2001, Nashville Board vote to retain the Lynx Fund and FIS' hiring of Mr. Graves in November 2002, FIS hired three professionals at an equivalent level to Mr. Graves. Mr. Graves' hiring resulted from a vacancy prompted by the departure of a senior consultant in August 2002 and was preceded by an extensive search.
In the article, Nashville's consultant stated the Lynx Fund's performance was "strong" in a difficult market. Since the account's April 1, 2002, inception through June 30, 2003, the Lynx Fund's performance was 13.38% net of fees vs. 10.44% for the CSFB Hedge Fund index, 5.18% for HFR's Fund of Funds index and -13.18% for the S&P 500 index. Although the offering memorandum allows greater flexibility, we honored Nashville's redemption request 11 days after the June 30th termination date by returning $15,289,692.42 vs. $15,000,000 originally invested. This amount represents 90% of Nashville's estimated capital account with the balance being held in reserve, pending the fund audit. For alternative investments, such timely liquidity is extraordinary.
In the article, a Nashville board member stated that since our finals presentation to the board did not cover certain partnership expenses, they should be refunded. Since each presenter was allotted 15 minutes to summarize their organization, process, performance and fund terms, it would have been very difficult to cover detailed partnership expenses. In fact, we have confirmed that none of the finalists covered such detailed partnership expenses. Prior to funding, the fund documents were reviewed for over three months by Nashville's representatives, and its consultant negotiated fee concessions from the general partner. Importantly, all of the partnership expenses and the swap arrangement mentioned in the article are disclosed in the fund documents, which was accepted and properly executed by Nashville. Additionally, according to a third-party survey provided to Nashville, compared to similar funds, the Lynx Fund's total expense ratio is about average.
Over the last seven years, FIS has been able to build an impressive client base by consistently providing quality service and investment performance delivered with integrity. Our dealings with Nashville have been consistent with that standard.
Tina Byles Poitevien
chief executive officer