By Dylan Emery Henderson Investors has launched its first ever hedge fund. The Henderson Technology ...
By Dylan Emery
Henderson Investors has launched its first ever hedge fund. The Henderson Technology Absolute Return fund is capped at $10m.
In six to 12 months from now, when the fund has a track record and performance figures are available, Hendersons will start to increase its hedge fund presence and market the product more widely.
Fund managers Brian Ashford-Russell and Tim Woolley run the fund from London but it will be Dublin-listed and domiciled in the Caymans.
Hendersons' first hedge fund offering is a technology fund because of the healthy appetite for technology funds and because that is Ashford-Russell and Woolley's area of expertise.
The fund should have roughly a 60/40 weighting split between the US and the rest of the world, with Woolley controlling the US side and Ashford-Russell managing the rest.
The fund will use alternative investment techniques, including gearing, shorting and derivatives, to lower volatility and increase performance, which goes against the commonly-held conception of hedge funds as highly volatile.
Ashford-Russell described the fund as potentially a school fee planning fund. He thinks the technology sector is particularly suitable for going short, as new developments render old technologies obsolete. In this way, many companies in the sector can go out of favour, making them good targets for short positions.
As an example, he cited the depreciation of the PC market as internet companies took over as the main drivers of the technology sector.
Even in the short term, the highly competitive nature of this capital-rich industry tends to create big losers as well as big winners, providing a good environment for going short, as long as stocks are well chosen. The average positions expected to be held are 100%-120% long and 30%-35% short.
The fund will invest in quoted derivatives, use active cash management, and gearing can be up to 100%.
Ashford-Russell, who has been running Henderson's long-only technology funds for 15 years, thinks the group needs some sort of track record to enter the hedge fund market seriously.
He said: "Six to 12 months performance records allows detailed analysis of the fund and how it operates."
Marketing of the fund is currently subdued and initial investment has been mainly by the senior personnel of the 1,000 or so companies that the two managers see every year.
If the fund is successful, however, the marketing strategy should be fully in place by the end of 2000.
The Henderson Technology Absolute Return fund went live on 19 November and was listed on the Irish Stock Exchange. It offers single pricing and dealing on a monthly basis with a minimum initial lump sum investment of $100,000.
There will be a 1.25% annual management charge, with an additional fee based upon performance. Up to 3% initial commission is available.
Mark Lund, managing director of global distribution at Hendersons, said: "This fund enables us to build on our existing expertise in technology and cater for those investors who believe that absolute returns are more important than relative returns."
The fund will receive the tax benefits of being domiciled in the Caymans and will be accessible to the US market.
Schroders tops 2019 list
24 companies wound up
'Strong social conscience'
To engage advisers and clients
Hargreaves Lansdown named fastest DC scheme