The Hedgeweek Interview: Johannes E. Schumacher, chief executive, Camelot Group: "Most commodity hedge funds limit their investment horizon to technical research"
Johannes E. Schumacher, chief executive of the Camelot Group, outlines the strategy for Camelot Global Investment I, a global macro fund that is set for launch at the beginning of September.
HW: What is the background to the Camelot Group and Camelot Global Investment I?
JS: Camelot Global Investment I, which is being set up and will be launched on September 1, is a global macro fund that utilises global economical developments, cycles and events. The strategy mirrors that of our first fund, Camelot Global Investment, which was a favourite among high net worth individuals, but the new fund is designed to meet the criteria notably of institutions, pension funds and funds of hedge funds.
Since the launch of trading start Camelot Global Investment has outperformed almost all investments in different classes and been largely uncorrelated to world markets.
We are targeting a return of 30-40 per cent per annum with a volatility of 11 per cent. The Camelot Global Investment fund, whose strategy is mirrored in the new fund, has returned a gross yield of 55.49 per cent in the 12 months to April.
The fund is managed by Merlin Global Enterprise, headed by chief executive Anne C. Signorino Gelo and senior trader Thomas Feldt, which has an excellent track record. I am chief executive of the Camelot Group, which Germany-based Klaus Rose and China-based Li Jinghao have been nominated as directors of Camelot Global Investment I. Eugene Geller is chief investment officer of Camelot Group, which was founded in 2004 and has approximately USD85m under management.
HW: Who are your service providers?
JS: Our investment advisor is Merlin Global Enterprise from Switzerland, while Olympia Capital is the administrator, Rothstein Kass is the auditor and Saxo Bank, Rand and RCG are prime brokers to the fund. Stuart Walker Hersant is the legal advisor.
HW: How and where do you distribute the fund? What is the profile of your current and targeted client base?
JS: A number of institutional partners have already signed up for the new fund and will invest as soon as it is officially launched. We have a capacity of USD30m up to the end of this year, of which 50 per cent is already under contract. Our main clients are institutional investors and high net worth individuals from central and eastern Europe and the Middle East.
HW: What is the investment process of your fund?
JS: Most commodity hedge funds limit their investment horizon only to a technical research. Unfortunately they don't take in account global macro economic events and situations. We have to deal with an absolutely new situation on the market where the programmes rule, and where the losses and the gains are bigger.
Due to its investments in futures Camelot is able to profit equally from falling and rising markets. Our analysis is founded on an abundance of data including own stocks research, analysis of political and social environments, biological expertise and continuous observation of harvesting weather. This puts us a decisive step ahead of most market players.
An experienced team of traders, analysts and experts uses state of the art trading programmes developed in-house, but the programmes are used only as an indicator - 80 per cent of our trades originate from analysis. The significant criteria are volatility, which is less than at traditional investment funds, and standard high levels of return, thanks to low correlation to any market.
HW: How do you generate ideas for the fund?
JS: Ideas are generated by Merlin's team of two traders and one analyst who discuss the market and receive data from a broad network of contacts worldwide. We also share our ideas with the public at large, which is quite unique, with a selection of our actual trades accessible in real time at www.schumacher-live.com. This is a great tool to give potential investors when they are considering an investment vehicle. It is a breath of fresh air compared with the black-box approach typical of hedge funds.
HW: What is your approach to managing risk?
JS: Risk management is carried out mostly at the portfolio level. We don't invest more than 15 per cent into any one position and we always have 50-80 per cent cash in the portfolio. Rather than being in a risky market segment, Camelot feels the responsibility of providing a core product in clients' portfolio. Strategy and operations are based on security, not gambling, as the results prove.
HW: Has your performance been as per budget and expectations? Do you expect your performance or style to change going forward?
JS: We are targeting performance of 30 to 40 per cent per annum, since the first fund has demonstrated that our strategy and team are able to achieve positive results over the long term. The Sharpe ratio of the strategy used by our first fund is 6.38. The track record of our investment manager, Merlin Global Investment, shows a gross yield of more than 240 per cent over 26 months with 96 per cent positive months.
HW: What opportunities are you looking at right now?
JS: There are a lot of opportunities in sugar, meat and cotton. Just watch them at www.schumacher-live.com.
HW: What events do you foresee in your sector in the year ahead?
JS: We are watching the purchasing power of the US dollar very critically at the moment and expect some corrections in the stock markets during summer.
HW: How will these events impact on your own portfolio?
JS: We are prepared, so they will have a positive impact for our investors.
HW: What differentiates you from other managers in your sector?
JS: We combine technical analysis with profound analysis, and the team has years of experience to draw upon. Strategic, analytical investment management in the field of commodities is hard to find, and the results tell their own story.
HW: Do you have any plans for other product launches in the near future?
JS: The strategy will be the same for any products we launch. At the moment we are offering shares in Camelot Global Investment I and managed accounts. For retail customers in Europe we will publish certificates based on the fund through a European bank. The range of products may expand, but the results will stay the same.
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