Old Mutual Asset Managers (OMAM) has added a number of external managers and new strategies to the Old Mutual Multi Strategy Fund.
This move is designed to increase diversification, further enhance risk management and to provide improved risk adjusted performance potential.
Launched in July 2003, the Multi Strategy Fund previously allocated capital across OMAM's range of managers and strategies, covering equity long/short and equity market neutral. The GBP 17 million fund has delivered 9.7% since launch (in sterling terms) with 3.1 per cent annual volatility (source: OMAM/BISYS Hedge Fund Services, as at 31 January 2005).
OMAM is taking advantage of its Multi Strategy Products team, headed by Richard Tomlinson, which has considerable expertise in manager and strategy selection, risk budgeting and portfolio optimisation. The team currently manages over GBP 200 million of assets. Using the team's expertise, OMAM has been able to further diversify the fund beyond its own range of global equity market neutral and equity long/short funds to also include macro, currency, commodity trading advisors and fixed income arbitrage.
Following the restructure at the end of January 2005, the fund breakdown is approximately: 30 per cent in equity market neutral; 35 per cent equity long/short; 20 per cent in fixed income; and 15 per cent in commodity trading advisors, macro and currency strategies.
The overall objectives of the fund remain unchanged: to achieve capital appreciation and closely control risk through a portfolio of hedge funds and it will remain a relatively focused portfolio targeting absolute returns with low volatility and low correlation with equity and bond markets.
The Multi Strategy Products team uses a proprietary, systematic investment process that allocates capital within the fund, determines overall fund leverage and provides detailed risk forecasts. The portfolio is re-optimised and re-balanced monthly, with systematic capital allocation between funds. All external funds are run on a managed account basis.
Richard Tomlinson, Head of OMAM's Multi Strategy Products team, said: "The inclusion of additional funds and strategies will increase diversification and possible sources of alpha, says Richard Tomlinson, head of OMAM's multi strategy products team. "In turn this should further increase the stability of fund returns and result in a more predictable distribution of returns. The use of managed accounts gives us the same level of product integrity and transparency as using internal managers. It gives us a very high level of liquidity and offers a number of other benefits in terms of portfolio analysis and risk, allowing us to closely manage the risk/return profile of the fund."
The fund is domiciled in the Cayman Islands with a Dublin listing. The minimum investment is USD 100,000, GBP 100,000 or EUR 100,000. The annual management fee is 1 per cent and there is no performance fee at the fund level. There are performance fees on the underlying funds.
"The Old Mutual Multi Strategy Fund is aimed at institutional and professional investors and is an ideal entry point to hedge funds, " said Andrew Lightbown, director of sales and marketing. "One of the keys to this fund is our Multi Strategy Products team, who have the appropriate experience, skills and resources to determine manager selection and portfolio construction. The addition of the external managers and strategies to the core holdings of OMAM's equity market neutral and equity long/short strategies, backed by the fact that we are using managed accounts, delivers an even more diversified and risk-robust portfolio."