Hedge fund manager 36 South has launched a high-risk/high-return fund called Excelsior, which seeks to protect against the risk of a significant spike in global inflation, caused by cen
Hedge fund manager 36 South has launched a high-risk/high-return fund called Excelsior, which seeks to protect against the risk of a significant spike in global inflation, caused by central banks around the world implementing expansionist monetary policies such as quantitative easing and near-zero interest rates.
Target returns are five times the G5 inflation rate over five per cent.
Excelsior will protect investors against this extreme event inflation risk by investing in long-dated out of the money (OTM) options across a range of asset classes, including equities, commodities, currencies and interest rates.
36 South is one of only a handful of funds worldwide to specialise in long-dated OTM options, and trades will be selected using the proprietary Quadrivium model.
The fund will also be denominated in US dollars as 36 South believes that the US may seek to devalue its currency to inflate away debt, thus causing tangible assets priced in US dollars to sky-rocket in price.
36 South’s last single-theme extreme event fund was the Black Swan Fund, set up in 2007 to protect investors against a significant market downturn. This now closed fund delivered returns in excess of 230 per cent in 2008.
Jerry Haworth, director and founder of 36 South (pictured), says: ‘Inflation is the single greatest risk facing the world economy at present. Whilst the prevailing view is that a sustained period of significant global inflation is unlikely, investors need to be attuned to this risk and the devastating effect it will have on their portfolio should this scenario come to pass.
‘Excelsior has been designed to provide protection against this and, because of the turbo-charged returns that investing in options can provide, has the potential to deliver excellent performance should significant inflation occur in even one of the asset classes in which the fund is invested.’
Excelsior will operate as a segregated portfolio company domiciled in the British Virgin Isles. The minimum investment is USD100,000 with an annual management fee of 1.25 per cent and performance fees of 20 per cent. There is no initial lock-up and redemptions are available monthly.
