CTA specialist RPM and asset manager Privium Fund Management are set to launch a new fund for Dutch investors.
The “Evolving CTA Fund” provides exposure to a portfolio of largely untapped smaller and innovative CTA managers across three sub strategies: trend-following, short-term and fundamental. The fund is developed in response to growing concerns over asset concentration and deteriorating returns from very large and well-known CTAs.
RPM Risk & Portfolio Management has roughly USD4bn in funds under management and advisory. RPM concluded, based on research, that CTAs in their “evolving phase” are the most promising from a risk/return perceptive. These CTAs are typically between two to seven years of age with USD30m to USD2bn in AuM – depending on investment strategy. Historically, Evolving CTAs have outperformed their larger peers by three per cent per year at an equal 10 per cent volatility, the RPM study found.
The fund will be benchmarked against the Barclay BTOP50 index, which tracks 20 of the largest and most well-known CTAs. The fund will be domiciled in The Netherlands and will invest in the Luxembourg-based RPM Evolving CTA Fund (SICAV). It offers daily liquidity, a unit size of 1.000, with a minimum subscription of EUR25,000 and is managed by AFM regulated investment manager Privium Fund Management.
RPM's chief executive Mikael Stenbom says: "We seek to identify and invest with CTAs who demonstrate potential to develop into the next generation of industry leaders. The aim is to find them before they become too large, or too old, to maintain the level of return that typically occurs during the first two to seven years of a CTA’s existence. The fund is the result of a research work that began in 2010 and that can be best described as a systemisation and verification of the experiences we have made during our twenty years as investors and risk manager of CTA world.”
Clayton Heijman, director of Privium Fund Management, says: “Today's large and well-known CTAs were unknown to most investors when their performance was at its most competitive. The ‘Evolving CTAs’ have demonstrated a unique expertise and ability to generate returns, in many cases with new, innovative ideas and methods.”
An asset manager develops like most other companies: a start-up phase followed by a growth phase with strong competitiveness. As they move into maturity, their competitive edge gradually deteriorates. A few have the ability to renew themselves, others fade away. Unfortunately, most investors are attracted to them at the peak in their life cycle. This fund focuses on managers that have entered into the growth or “evolving” phase.