Old Mutual Global Investors (OMGI) is to launch the Old Mutual UK Specialist Equity Fund, a uk mid and small cap liquid alternatives fund domiciled in Ireland, on 28 April 2016.
The Fund will be registered for sale in a range of European countries and Singapore, subject to regulatory approval.
Managed by Tim Service, Fund Manager, UK Equities and Deputy Fund Manager, Luke Kerr (pictured), the investment objective of the Fund is to achieve capital appreciation by taking long and short positions in UK equities, primarily outside the FTSE 100 Index, maintaining low net exposure to underlying equity markets. The Fund aims to deliver absolute returns in all market conditions.
The Fund will mirror the strategy of the Cayman domiciled vehicle which has a long track record dating back to 2003. Since inception, the Cayman vehicle has delivered an annualised return of 7.5 per cent1 after fees, and 8.7 per cent1 over the past three years, with a largely market neutral approach.
The Fund will be well diversified, holding a range of between 80 and 110 long and short positions. The Fund will typically have a net exposure of between -20 per cent and +20 per cent of NAV, making use of individual single-stock short positions and index baskets to control the net exposure to equity markets.
Service and Kerr will be supported by the highly rated and award winning UK small and mid-cap equities team. The team will use a combination of top-down macroeconomic analysis, and bottom-up stock-picking to structure the Fund. The team believe the small and midcap universe of companies is less well researched than large companies, which should provide more opportunities to generate returns for the Fund.
Service says: “Market volatility has increased in recent months, highlighting the potential value of alternative investments within a portfolio. The UK mid and small cap team has built a long and successful track record. This fund offers access to this expertise, with low net exposure to underlying equity markets, and the ability to deliver a return from falling as well as rising individual share prices.
“We work very closely with OMGI’s award winning UK equity team, whose in-depth knowledge of UK companies is second to none. The results can be seen in the low volatility and steady returns of this strategy over 13 years. The maximum drawdown of the Cayman strategy since 2003 has been just 4.1 per cent1, and the sterling asset class has never had a down year. The new UCITs version will be run on the same basis that I have used since taking over the fund in 2014.”
Warren Tonkinson, Managing Director, Old Mutual Global Investors. adds: “OMGI has one of the most successful UK small and mid-cap teams. With a proven track record in managing a low net equity long short investment process for 13 years, a number of clients have shown interest in wanting to access the investment approach in a UCITs wrapper. This launch demonstrates further our commitment to providing clients with investment solutions most suitable for them.”
