Lazard Asset Management this week intends to launch a Jersey-based fund of hedge funds to be managed...
Lazard Asset Management this week intends to launch a Jersey-based fund of hedge funds to be managed by John Chatfeild-Roberts and his team.
The product is being created by converting the group's existing Jersey investment company, the Lazard Personal Portfolio Fund, subject to shareholder approval this week.
This includes a dollar share class with $3m which the group wants to rename Astral and run as a fund of hedge funds.
Chatfeild-Roberts has been increasing its exposure to hedge funds since last August and it now has only 20% exposure to long only vehicles.
He now has holdings in 10 hedge funds including Roger Guy's Gartmore AlphaGen Capella fund.
Lazards has been using the period since last summer to build up a track record and experience in running alternative investment strategies. It has not publicised the fact because it believes this could be to the detriment of existing shareholders in the dollar share class.
The dollar share class has daily pricing but the hedge funds within it are priced monthly. This would have given new entrants into the share class the opportunity to potentially buy hedge fund assets at a discount, to the detriment of existing shareholders.
This week Lazard is looking for shareholder approval to switch the share class to monthly pricing, which should eliminate this problem.
The Lazard Personal Portfolio Fund also has a daily priced sterling share class with £9.3m in assets. Lazards intends to rename this as the a Growth share class. At present some 20% of its assets are in hedge funds and the team wants to run it as a predominantly long only portfolio which will retain daily pricing.
Both share classes will retain their 5% initial and 1.5% annual fees as well as 3% initial and 0.5% renewal commission. The Astral class will have a performance fee added. This is equivalent to 7.5% of absolute performance, calculated and paid monthly.
The performance fee includes a high watermark.
As a Jersey investment company the vehicle is regulated by the Jersey authorities but is not recognised by the FSA.
Chatfeild-Roberts, head of the Lazard Independent Funds team which also comprises Algy Smith-Maxwell and Peter Lawery, said they had the experience to run a fund of hedge funds.
Among the long only fund of funds they run is the Lazards Income Portfolio.
He said: "We have been running this for over a year. You can learn a lot in that sort of time period."
Chatfeild-Roberts is looking to invest in equity rather than fixed interest hedge funds.
He is also looking to buy long/short and market neutral strategies rather than global macro or arbitrage funds.
He said: "In terms of geographic asset allocation we are going for the less efficient markets, so we are not concentrating on the US as much as Europe."
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