RiverCrest Capital, the boutique fund manager run by financiers John Beckwith and Rod Barker, believes it has found the formula to generate equity returns while minimising macro risk and hopes to tempt wealthy euro zone investors to play along.
The European Equity Alpha Fund, one month old this week, is managed by former M&G star managers Giles Worthington and Tim Short, who developed the long-short, market-neutral product while working for the asset management arm of insurer Prudential
The Dublin-domiciled fund was incubated and internally tested at M&G for 18 months but when the group decided not to launch it externally, Worthington and Short were hired by RiverCrest.
The fund is targeting absolute returns of 12-15 percent with a target volatility of 5-8 percent. It will charge an annual management fee of 1.6 percent plus a performance fee of 20 percent. Minimum investment has been set at 100,000 pounds.
RiverCrest CEO Rod Barker believes the fund will appeal to high net worth investors looking for somewhere smart to park their money in volatile markets, which can deliver potentially lucrative returns on carefully selected portfolios.
It's very, very difficult for stockpickers in the current environment due to such high degrees of correlation, Barker told Reuters. For example BMW doesn't trade like BMW, it trades like Greece or the euro, so stock selection is key.
More than half of absolute return funds designed to offer investors a positive return regardless of market conditions lost investors money in 2011, data from Morningstar shows.
Barker believes that his team's exceptional track record -- Worthington was in the top quartile of fund managers for 8 consecutive years -- will enable the fund to navigate through current macroeconomic headwinds.
The fund's initial investor focus is on partners, friends and families. Once it has been approved for sale across the European Union, it will target wealth management platforms, IFAs, institutional investors and offshore fund of funds looking for more liquid strategies and capital preservation.
We are focused on very, very liquid stocks with market capitalisations of at least $20 billion (12.8 billion pounds), so eventually we could run $2-3 billion of assets under management quite easily, Barker said.
This is the second fund launch for RiverCrest Capital since its formation a year ago when Beckwith's private investment vehicle Pacific Investments went into business with Barker, a former partner at International Standard Asset Management.
Minority partners include Michael Spencer, CEO of ICAP, the world's largest interdealer broker and Jim Pettigrew, non-executive director of Hermes, Aberdeen Asset Management and RBC Europe.
John Beckwith has a long history in the asset management business, with ventures including the Lion Trust, River & Mercantile, Nevsky Capital and most recently Thames River Capital, which was sold to F&C
In October, RiverCrest launched a Cayman-domiciled global equity fund managed by Alastair MacLeod and Peter Simon, formerly of Landsdowne Partners.
Barker said over the next few years the fund planned to add 3 or 4 more teams with a proven performance track record. ($1 = 0.6396 British pounds)
(Editing by Sinead Cruise and Helen Massy-Beresford)