Old Mutual Global Investors launches first Cayman hedge fund
Old Mutual Global Investors has announced the launch of the Old Mutual Arbea Fund, a global market neutral hedge fund domiciled in Cayman.
Managed by Ian Heslop, Amadeo Alentorn and Mike Servent, the fund shares the same investment process as that of the $220m Old Mutual Global Equity Absolute Return Fund, a Ucits fund which has been managed by the team since 2009 and which has returned 15.6% and 10.8% annualised over one and three years respectively, according to Old Mutual GI.
Domiciled in Cayman, the fund is a global equity market neutral fund with an investable universe covering 3,500 liquid stocks across developed markets, and the emerging markets of Korea, India, Taiwan and China (through Hong Kong).
As Old Mutual GI explained, the objective is to target 9% volatility using gross leverage of between 300 and 400% and aim to ensure that the correlation of the fund’s returns to equity returns is very low.
The fund is aiming for a return of cash plus 9% annualised and is only invested in equities or equity equivalents with all foreign exchange exposure being hedged back to base currency.
Old Mutual Arbea Fund will also aim to generate its performance from a very diversified investment portfolio of over 700 positions, which will be roughly equally split between long and short positions.
Ian Heslop, head portfolio manager, commented: “We have calibrated the risk/return profile to seek to meet the needs of Pension Fund and other Institutional Investors who are looking to achieve returns in the order of 9-10% with volatility of less than 9%”
Donald Pepper, Managing Director of Alternatives, added: “The block of seed capital from Old Mutual demonstrates the Firm’s commitment to its Hedge Fund business and, more specifically, to the strategy of Ian’s team. Investors are looking for a strong alignment of interest between them and the investment manager. This scale of co-investment very clearly delivers that.”
The launch of Old Mutual Arbea Fund brings the number of hedge funds managed by Old Mutual Global Investors to three. Ashton Bradbury manages the UK Specialist Equity fund, an Equity Long/Short fund with a 10 year track record and no down years. Paul Simpson and John Dow manage the Old Mutual Global Statistical Arbitrage Fund which a 6 year track record that included +18.3% return in 2008.