Universal-Investment and New York-based hedge fund specialist York Asset Management have launched an absolute return fund, The York Lion Merger Arbitrage Liquidity Fund UI.

The fund is based upon The Lion Fund and is the first global merger arbitrage strategy launched as a as Ucits fund in Europe.

The fund invests in daily tradable securities in both established and emerging markets. It aims at arbitrages which occur due to mergers and takeovers as well as other event driven situations.

“With our investment method we distinguish between seven different types of situations,” says Nick Walker, chief investment officer of York Asset Management and manager to the fund. “These types range from the launch of a SPAC to a friendly or a hostile takeover up to discount trades in the sequence of litigations.”

An example is the 2008 acquisition of Brasil Telecom by Telemar. The strategy’s annualised return in this transaction was 22.4 per cent for the 216 days in which it was invested.

The Lion Fund hedge fund started in 1996 in the US. Currently, the fund manages USD250m. The fund aims to achieve consistent long-term capital appreciation of annual nine per cent with a low correlation to equity markets.

“We are proud to launch the first European Ucits fund with a global merger arbitrage strategy,” says Bernd Vorbeck, spokesman of Universal-Investment’s management board. “The York Lion Merger Arbitrage Liquidity Fund UI is a great enrichment for UI-Newcits, Universal-Investment’s platform for the new funds generation of so called Newcits funds.”