Legg Mason Global Asset Management has launched Permal Hedge Strategies Fund, a fixed income focused multi-manager, multi strategy fund of hedge funds.
The Fund invests in a broad range of fixed income strategies, employing flexible asset allocation and moving capital between credit and non credit strategies. Investments include developed as well as emerging market fixed income and long/short fixed income. There are also smaller allocations to event-driven strategies, such as risk arbitrage, distressed debt, special situations and activists, as well as global macro strategies, including both systematic and discretionary managers, which are intended to mitigate market volatility.
"Given market volatility and investor demand for lower risk products, we have seen more desire for lower correlated, alternative investment strategies. We worked collaboratively to bring to market a product that would not only fit investors needs and would bring Permal's expertise as one of the oldest fund of hedge funds to the retail market," says Matt Schiffman, Head of Global Marketing for Legg Mason. "The fund is designed to take Permal's existing product range and add increased liquidity and transparency through a publicly traded offering."
Javier Dyer, Portfolio Manager of Permal Hedge Strategies Fund and Permal Group Deputy Chief Investment Officer, says: "With corporate activity likely to increase throughout 2012, we believe that this is a good area to be in. We expect to see corporate restructurings, both inside and outside of bankruptcy, and distressed credit opportunities. Currently there are late-stage bankruptcy situations that are offering attractive IRRs for what are effectively liquidation situations. Elsewhere, with many loan and bond re-financings still due for renewal in 2013 and 2014, we again expect multiple long, short and distressed opportunities, with capital markets asserting greater discipline in differentiating between the good and bad credits. Outside of corporate credit, we like non-agency RMBS, with many securities offering significantly higher cash yields than corporate bonds."
The Fund, which is registered under both the Securities Act of 1933 and Investment Company Act of 1940, is managed by Legg Mason Partners and sub-advised by Permal Asset Management Inc, a member of Permal Group, the USD20 billion alternative investment manager. It has been structured to provide investors with 1099 tax reporting and will be available to US accredited investors. The minimum investment is USD25,000 and liquidity is quarterly.
Permal Hedge Strategies Fund has a high degree of overlap with a flagship Permal fixed income fund and invests in 20 to 40 underlying hedge funds.