Fri, 29/09/2006 - 06:58
Resolution Asset Management and Hexam Capital Partners have launched their second fund, the Global Resources Absolute Return Fund.
The fund is the second new product from Resolution's collaboration with Hexam Capital Partners' emerging markets investment specialists John Payne, Marina Akopian, Bryan Collings, Grant Shotter and Wilfred Willwong. Stuart Richards is due to join the Partnership later this year. All six are former members of the Emerging Markets team at Baring Asset Management.
John Payne has responsibility for this new fund at Hexam. It is a long short hedge fund, the second of an initial suite of four emerging markets products. The Fund has a target return of 20% with a volatility level of 15% pa. There is a performance fee of 20% on absolute returns over a high watermark, plus 1.5% AMC. Payne will advise Resolution on a concentrated portfolio of around 50 stocks or less and the Fund can go net short.
At Hexam, Marina Akopian has responsibility for the first fund in the range launched in August 2006, the Resolution EMEA Absolute Return Fund. In addition, two long only funds - an Emerging Europe and Global Emerging Markets - are scheduled to go live within the next few months.
Jonathan Polin, Sales & Marketing Director of Resolution Asset Management said: 'John and the rest of the immensely talented Hexam team possess a breadth and depth of experience in emerging markets investment that is held in the highest esteem both domestically and internationally. Their arrival has immediately boosted the range and diversity of funds offered across our boutiques and will provide us with opportunities to distribute our funds more widely than ever before'.
'Resolution has clearly demonstrated to the market that it has the formula to attract talented, entrepreneurial individuals to advise on Resolution funds that deliver alpha and I am confident that the new fund will be no exception.'
The portfolio will invest across a spectrum of commodity based equities including base metals, bulk commodities, chemicals, energy, precious metals and soft commodities. An investment theme in the portfolio will be the industrialisation of the BRIC economies Brazil, Russia, China and India).
John Payne, manager of the Resolution Global Resources Absolute Return Fund said: 'Commodities are a lead indicator of economic growth. Furthermore, the commodity asset class is inextricably linked to the emerging market asset class. Many emerging countries are significant exporters of commodities, while also increasingly accounting for a very significant share of global demand. Given the pace of growth of industrialisation of the emerging economies, which in turn have high populations, the demand for commodities generally is expected to continue to increase at a rate significantly higher than that in the OECD'.
'Short term, prices are expected to be reasonably volatile but taking a longer term view, we believe the current cycle that is in place can potentially last for many years. Indeed, given the expected magnitude of demand, the trend in place could lead to a multi-decade period of steady returns from the asset class. Furthermore, even if prices for base metals for example, or oil, fell 15-20% from current levels, companies in the asset class are expected to continue to enjoy very strong cashflows, increased dividend payouts, and returns on capital well above 20%.'
Resolution's latest collaboration with Hexam operates on a similar basis to the ones it has already established with Barry Norris and Oliver Russ at Argonaut and David Stevenson and Andrew Kelly at Cartesian.
Like Cartesian and Argonaut, the Resolution/Emerging Markets partnership will be set up as a 50/50 joint venture with the soon to be six Hexam partners providing the intellectual capital and fund management skills whilst Resolution Asset Management supplies marketing, distribution and all operational, risk and compliance functions.
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