F&C opens European equity long/short hedge fund

F&C Alternative Investments, the single strategy hedge fund division of F&C Asset Management plc, has launched an equity long/short fund.


The F&C Citrine Fund is now open for new investment. It is managed by Frederic Desage-Bonnet and pursues a Pan-European equity long/short strategy, will be targeted at institutional investors including funds of hedge funds.


Alex Ingham Clark, Director of F&C Alternative Investments, said: "Through our award-winning equity volatility trading fund, F&C Amethyst (see previous Hedgeweek Interview), we have already set out our ambitions to become a significant institutional provider of hedge funds."


He added: "This fund raising is an important development for the business because it demonstrates our commitment to build upon our existing presence in the derivatives-based hedge fund arena into one of the more 'mainstream', and highly competitive, segments of the hedge fund market," he said.


This will be the first major fund raising drive for F&C Citrine which was launched in May 2004 and currently has EUR 48 million of assets. The Fund, which is Cayman Islands domiciled and listed on the Irish Stock Exchange, has a target absolute return of 10-12% per annum with a target Sharpe Ratio above 1. Over the last year the fund is up 11.47% and has a Sharpe Ratio of 3.70.


"F&C Citrine has met its return expectations with much lower levels of risk than the typical fund in the peer group which is why we believe this vehicle will prove particularly attractive to institutional investors," commented Ingham Clark.


Explaining his investment approach, Desage-Bonnet said:  "We have a very disciplined approach to risk management aimed at having a low correlation to the market over time and with leverage capped at a maximum of 200% yet a maximum net exposure of 50% which is much lower than the peer group."


"At the long end of the portfolio we focus on companies with strong franchises, sustainable growth and strong free cash flow generation whereas our short positions are invariably in companies with poor industry fundamentals, deteriorating balance sheets and declining returns on capital employed.


"Across all positions we have a process of setting clear absolute price targets and a disciplined stop loss system which I believe is key to capital preservation," he concluded.


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