Martin Currie is to launch an 'aggressive' European long/ short hedge fund in June with a minimum investment of $100,000.
The company has hired Mike Nichol, former co-manager of Scottish Value Management's Highlander European long/ short fund, to manage the Martin Currie European Absolute Return Fund, with the help of Dino Fuschillo, head of Martin Currie's European equity team.
To raise capital for the new fund, the firm has entered into a private placement and seeding agreement with Fortune Asset Management, a London-based hedge fund specialist which runs an emerging manager programme that seeks to identify good new hedge fund managers. In recent years, the firm has sponsored funds including Lazard European Opportunities and SVM's Highlander.
With their seed capital of $20m, the fund is expected to launch with up to $50m in assets under management, with a closing cap of around $400m.
The fund will hold 40 long and 40 short positions picked using a bottom-up approach with a risk model overlay designed by Nichol.
He divides the MSCI Index into nine sectors, which roughly correspond with those of the index, and applies a maximum overweight or underweight position in each sector of 15%.
Underlying stocks are picked according to Martin Currie's dynamic stock matrix, which involves grading each stock according to five criteria ' growth, value, director dealing, earnings and change. Change applies to both internal restructuring and shifts in the macro environment.
One example of a position picked largely on this change criteria is the company Continental, according to Ross Leckie, director of communications.
'There was a change in the form of a vast improvement of the firm's pricing power caused by the failure of its competitors,' he said.
'While Nichol's speciality is risk management and portfolio construction, Fuschillo's is stock picking,' added Leckie.
Fuschillo will apply an aggressive stock picking approach to the fund, similar to that of his long-only fund where he never takes underweight positions in an index stock ' going only overweight or zero weighted at minimum.
Both long and short positions will be picked equally aggressively, according to Leckie, and the managers will remain focused on their strategy, un-swayed by market bounces.
'We see ourselves as not following the market at all and we do not mind much if some sector is running away,' he said.
Martin Currie has been expanding its hedge fund business and now manages around $300m in four equity long/short funds investing in Japan, the UK, Asia and China.
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