Magnum Global Investments has sponsored the launch of two offshore US equity hedge funds - a market neutral fund and a small-cap long/short fund.
The CM Market Neutral fund will use a pairing strategy to match long and short positions in an attempt to guarantee positive returns in any market conditions.
The fund has been launched on the back of an almost identical fund run by the same manager, Patrick Adams. Adams' US limited partnership has performed well since launch, with a 22.7% gain and 7.5% volatility versus a loss of 13.8% on the S&P 500 since the fund partnership started trading in January 2002.
"Market neutral hedge funds have enjoyed the lowest annualised standard deviation of any hedge fund strategy," said Dion Friedland, chairman of Magnum, "while annual returns of the sector have been an attractive 11.3%. Inclusion of this strategy in a portfolio should significantly lower the risk while increasing the risk-adjusted return."
The second fund launch is the Zeff Capital Offshore fund, which will seek out value investments in the small-cap US equity market.
"We buy stock in companies that sell at discounts of 50% or more of what the fund believes they are worth," said Daniel Zeff, fund manager. "Holdings are in companies with heavy net cash balances and/or strong cash flow generating capacity that are selling at low single-digit earnings and cash flow multiples.
"These value gaps can quickly close when these companies are discovered by Wall Street or other companies in their industry. Since we began the strategy, nine positions in our portfolio have received takeover offers out of a total of about 40-50 holdings during the period."
The fund is highly concentrated, with around 15-20 core long positions combined with some shorts.
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation