catherine tan managed fund will increase company's long/short product range to three
Lloyd George Management is to launch a Japan hedge fund later this year which is likely to be managed by Catherine Tan.
Details of the portfolio and the fund launch date have not been finalised although the hedge fund launch will take the group's range of long/short products to three.
It already offers LG Europe Plus, which is managed by Rupert Morrell, and LG Asian Plus, which is run by Zaheer Sitabkhan. Sitabkhan is also likely to assist Tan in the management of the Japan long/short fund. Tan currently runs the LG SLI Japan fund, which Lloyd George jointly manages with Sumitomo Life in Japan. Lloyd George Management has also opened a Singapore operation to assist with its equity research in the Asean region. Tan has moved from Hong Kong to Singapore to head up the operation.
LG Europe Plus is running with a portfolio of 30 stocks including 22 long and eight short positions.
The fund, launched in September last year, aims to deliver annual returns of 15% to 20% net of fees. The fund typically focuses on mid and large-cap stocks with a e500m minimum market cap. The fund is pan-European although it has a strong Continental bias.
Morrell runs the fund with a mix of core and satellite positions, with core long and short positions aiming to highlight low risk opportunities offering returns of 15% to 20%.
He defines satellite positions as shorter-term trading ideas thrown up by market events and tends to anticipate 5% to 10% returns from these holdings.
Morrell currently has around 60% in satellite positions and 40% in core positions on the back of current market volatility. Morrell said: 'There are a lot of hedge funds out there that are market neutral and looking for small, incremental moves. I am not doing that ' I am looking for the best long and best short ideas. The fund is pan-European so there is exposure to the UK but around two-thirds of the stocks are from the Continent.'
Morrell also has a strict sell discipline on the fund ' if any long or short position produces a loss of 15% or the equivalent of 0.5% of the fund's net asset value he will sell it. No more than 10% of the net asset value of the fund is in any one stock and the average position size of stocks in LG Europe Plus is 4%.
Around 38% of the fund's long holdings are in value stocks including small caps and companies in transition while 25% of the portfolio is in growth stocks, including companies with strong revenue, earnings or cashflow momentum.
Around 8% of Morrell's long positions are seeking to benefit from thematic trends such as cyclical plays and 7% of his long holdings are based on restructuring stories such as management changes or mergers. Amid his short positions, around 55% are looking to benefit from stock de-ratings while 12% of his short holdings are based on themes such as the debt crisis in Argentina.
According to Lloyd George Management, LG Europe Plus saw growth of 6.73% net of its 20% performance fee, in the period between 3 September 2001 to 31 January 2002, compared with a fall of 0.91% in the MSCI Pan Europe Index with dividends reinvested over the same time period.
Partner Insight: For Blackfinch, the arrival of its IHT portfolio services was a 'natural evolution' in the group's offering and points to an established track record of returning cash to investors.
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