Dexion Capital is expecting to raise between GBP 75m and GBP 125m for Dexion Trading, its third and latest London-listed fund of hedge funds.
Robin Bowie, CEO of London-based Dexion Capital, said: 'Our aim has been to bring a suite of institutional quality fund management groups to the closed-end market. Dexion Trading provides a broad-based exposure to trading strategies and should give rise to returns with low correlation to equity and bond markets, thus bringing strong diversification benefits to portfolios of more traditional assets. It should really shine at times when there is stress and turmoil in the markets, particularly in equity markets but also in fixed income and credit.'
The listing is sponsored by ABN Amro. Dexion Trading is targeting an annualised investment return of 7% to 12% (in dollars) net of all fees and annualised volatility of less than 9%, in each case over any three to five year period with little or no correlation to traditional equity benchmarks.
The sub manager with responsibility for implementing the company's investment policy is FRM Investment Management, part of the FRM Group. The FRM Group is one of the world's largest fund of hedge fund managers, with over USD12 billion under discretionary management in funds of hedge funds and 190 people employed globally. The FRM Group has offices in London, New York, Tokyo, Sydney, Guernsey and San Diego.
In a similar way to Dexion's previous listed FoHFs, Dexion Absolute and Dexion Equity Alternative, Dexion Trading will replicate an existing fund. In this case the investment strategy will be based on FRM's Absolute Alpha Opportunitistic product, which since April 2001 has returned investors 29.23% (sterling class) and average annualised volatility of around 3.5%. It has outperformed both the MSCI World TR Index (USD) and the FTSE All Share Index since June 2002, when it adopted its present form. It is expected to have 60% or more overlap in managers with Absolute Alpha Opportunistic.
Dexion Trading's portfolio will be allocated approximately 80% to directional trading strategies and 20% to relative value strategies. These allocations seek to balance higher but more volatile returns from directional trading strategies with lower but more consistent returns from relative value strategies. The overall portfolio will aim to have little or no correlation to traditional equity benchmarks.
The investment advisors and portfolio construction of the three Dexion products differ from one another. Dexion Capital's existing London-listed products are Dexion Absolute (launched in December 2002 and now with £240m in assets), a broadly diversified product advised by Harris Alternatives, and Dexion Equity Alternative (launched in April 2004 with £85m in assets), a more focussed product with a significant allocation to hedged equity managers advised by K2 Advisors. Dexion Trading aims to provide investors with a product that gives them diversification from traditional bond and equity portfolios.
Dexion Trading will offer daily liquidity, weekly estimated NAVs (confirmed monthly) and a dedicated website . It is expected to qualify for SASS and SIPP investment as well as ISAs and PEPs. Investors incur a 1.5% management fee, with a 10% performance fee subject to a high watermark. The company also incorporates several features to aid in managing any discount to NAV.
Latest time and date for receipt of completed Public Application Forms 11.00 a.m. on 23 November 2004
Latest time and date for receipt of Placing commitments 3.00 p.m. on 23 November 2004.
Result of Placing and Offer for Subscription and Issue Price of 24 November 2004.
Dealings in Shares commence on the London Stock Exchange 29 November 2004.