product launch | Third in fund of hedge funds series uses the same portfolio construction strategy
Gam is to launch a third tranche of its successful Gam Diversity fund of hedge funds, and has set a $3.2bn cap on Diversity I.
Fund manager David Smith said he put a cap on Diversity I to avoid diluting the impact of his concentrated fund selection process. The final details of how Diversity III will be run have not been finalised, but it will have around the same number of managers and strategies as the others.
Smith said: "Gam Diversity III will have a similar, concentrated portfolio construction to our existing global multi-strategy funds."
Gam Diversity III will be domiciled in the BVI and have US dollar, euro and sterling-denominated share classes, listed on the London Stock Exchange. Minimum investments will be $5,000, E5,000 or £3,000.
Managers are chosen for the Diversity funds by a team of 40 investment professionals. They focus on quantitative analysis that scrutinises all aspects of external managers and qualitative statistics using proprietary software in choosing managers. In the bottom-up approach, if Smith likes a certain strategy, he will overweight managers in that type of strategy. He looks for managers who have identified anomalies in the market that can be exploited. Currency hedging may be employed to protect against exchange rate risk.
Strategies used for the Diversity funds are equity hedge; fixed income hedge; event-driven; and discretionary macro. Managers included in the Diversity portfolio are: Strategic Fixed Income; TFF; Raptor; Standard Pacific Capital Offshore Fund; Green T Fund; Caxton Equity Growth Fund; Karsch Capital Fund; AlphaGen Capella Fund; Egerton Capital; and Theorema Europe Fund.
Managers included in the Diversity II portfolio are: Crescendo UK Fund; Strategic Fixed Income; Crescendo European Fund; Moore Global Fixed Income fund; The Carrousel Fund; JF Asia Absolute Returns Fund; Pharo Arbitrage Fund; Green T Fund; New Star Hedge Fund; and Raptor.
All three currency classes will qualify for inclusion in a UK Self-invested Personal Pension Scheme.
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First mentioned in Cridland Report