Brevan Howard has announced it has launched its third newcits to partially replicate the performance of the firm’s USD24billion flagship.
Brevan Howard has announced it has launched its third newcits to partially replicate the performance of the firm’s USD24billion flagship. Entitled the Brevan Howard Investment Fund – Absolute Return Macro Fund, it was seeded with USD100million of proprietary money and will only track the Brevan Howard Master Fund’s long-term views on FX, equities and interest rates. This is a key point, given that the fund must adhere to strict regulations under the UCITS umbrella. To that end, unlike its hedge fund brother, this new fund will avoid using the same derivatives and short-term trading strategies to ensure liquidity is kept under control. According to the firm’s CEO, Nagi Kawkabani, the fund will only replicate the longer-term structural views of the master fund and will stay in liquid futures, swaps and FX forwards. Given that the master fund is closed this Ucits variant is a great opportunity for investors who want to benefit, albeit somewhat indirectly, from the flagship’s performance, and as Kawkabani pointed out, the fund structure would be less capacity constrained because it wouldn’t be trading in illiquid instruments such as options. 2010 has seen a huge number of newcits being launched, but some hedge fund managers have expressed caution. Speaking in June this year at Monaco, Paul Marshall (pictured, founder of Marshall Wace), was quoted as saying: “The Ucits structure is being used to win assets, but there is potential for people to be disappointed as what they are investing in are diluted versions of non-Ucits products.” Brevan Howard will not be promoting the Ucits fund as an onshore equivalent of the master fund.
