Lumina Investments, founded and managed by three North Carolina college students, has opened its first hedge fund that seeks to capitalise on the growing influence of "macro events" on the behaviour of global financial markets.
"Globalisation has increased correlation and volatility among international financial markets. We believe there is upside investment opportunity through a strategy founded on understanding international developments and their global impact," says Elliot Carol, chairman and principal managing partner of Lumina Investments.
Lumina's new fund will invest directly and indirectly into markets that are affected by international political and economic volatility using equities, commodities, fixed income and currency trading.
"Uncertainty in the Middle East is driving up the price of oil, while the growing burden of sovereign debt poses severe long-term economic challenges for Europe and Japan," Carol says. "We're watching these macro events and how they are driving the markets. Focusing only on traditional economic indicators is no longer sufficient to inform investing decisions. This is the new normal."
Carol, Marcus Varsano and Ryan Mahoney formed Lumina Investments in 2011. Carol and Varsano, Lumina's director of investor relations, are students at the University of North Carolina Wilmington's Cameron School of Business. Mahoney, the firm's specialist in global securities and derivative structures, is a student at East Carolina University.
"The entire frame of reference for us, all in our early 20s, has been a post-financial crisis world," Varsano says. "Today, you must have sophisticated investment strategies and a willingness to embrace reasonable risk. Fast-paced change is a constant. You must account for dynamic computer programming that is a signature of the new generation. There is no returning to the 'good old days' of investing in companies based solely on their balance sheets."