Eddington Capital Management has launched The Eddington Triple Alpha Fund with USD 24 million seed capital from Caledonia Investments plc.
Eddington Capital Management (Eddington) is investment manager to the new Cayman-registered, Dublin-listed fund of hedge funds which launched on 1 September 2003.
Glenn Baggley, CEO of Eddington said: "We believe that the fund will offer investors a significantly different profile to that normally associated with funds of funds, not least because it has a substantially higher return target. A sizable fraction of investors seek higher returns than are currently on offer, and would be willing to accept higher volatility to achieve them."
He said: "Ultra risk-averse investors have a bewildering choice of funds and structured products to choose from, but more risk tolerant investors have no choice at all. We target 12% volatility, which is higher than our peers (but remains far below that of equities, where many investors have the bulk of their assets) and seek to deliver 20% per annum net of all fees."
"The key to the success of the fund will be manager selection. We see far greater potential in the selection of talented managers than in timing the market through strategy allocation. However, we see no need for excess concentration -- the fund currently has investments with 22 managers, the largest being 6.3%."
The largest strategy allocations are 21% CTA, 17% Equity Hedge, 13% Macro, 8% Convertible Arb, 4% Merger Arb, 4% Mortgage Backed, 4% Foreign Exchange, 4% Fixed Income, and 4% Emerging Markets.
However, those allocations are largely manager or portfolio analysis driven - Eddington takes a bottom-up approach to strategy allocations, finding talented managers first then combining them to form a robust portfolio.
Baggely said: "In addition, many of these managers have a unique approach and don't conform to the usual profile for their strategy. The result is a portfolio with considerable diversity, which we do not expect to be highly correlated to equity or bond markets, or other funds of funds."
He added: "The fund will be well diversified (by manager, strategy, and geographical emphasis), will employ no additional leverage (beyond that of the underlying managers) and will be designed to appeal to Institutions, HNWI, and Family Offices. We think the innovative approach, high return target at a sensible volatility, flexible fee structure, Irish Stock Exchange Listing, and other innovations will appeal to a wide range of return-focused investors."
The new Fund's Irish Stock Exchange Administrator is Customs House and the Custodian is Barings (Ireland) Ltd.
Copyright Hedgeweek 2003