Emerging markets hedge fund Pembroke unveils UCITS strategy

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London-based global long/short equity hedge fund Pembroke Emerging Markets is rolling out a UCITS version of its Cayman strategy to tap into growing investor demand for uncorrelated emerging markets exposure. 

Pembroke, a boutique EM equities strategy operating under the umbrella of UK-based multi-boutique investment firm BennBridge, is led by equities and derivatives market veteran Sanjiv Bhatia, a former Harvard Endowment portfolio manager and Goldman Sachs trader. 

The existing Cayman strategy, which launched in April 2018, has generated a net annualised return of more than 10 per cent, with a Sharpe ratio of 1.83 and 5.7 per cent volatility, since inception. 

The new UCITS offering, which launches on the Italian Hedge Invest (HI) platform, will closely mirror the established Cayman fund. 

The strategy, which targets returns in the 10-12 per cent range, looks to capitalise on demographic changes across emerging economies, trading a low-net, liquid, fundamental, bottom-up stock-picking strategy through various cycles using convexity plays and tail risk hedging to boost alpha generation. 

“Many investors contemplating EM do not want to assume the volatility and the drawdowns typically associated with these markets,” Bhatia said. “The Pembroke UCITS Fund seeks to offer a solution for these investors, as well as providing a source of uncorrelated alpha and reduced volatility for multi-manager hedge fund portfolios.” 

Before launching Pembroke, Bhatia was managing director and head of global equities at Harvard Management Company, managing both long only and absolute return portfolios. Prior to that he was CIO and founder of Asia-focused, catalyst-driven Isometric Capital Management in Hong Kong, and earlier, a portfolio manager at Deephaven Capital in Hong Kong running part of its Global Market Neutral Fund and the Global Event Driven Fund. He began his career in 1992 as a convertible bond trader at Goldman Sachs. 

In an interview with Hedgeweek in November, Bhatia explained the strategy’s alpha-generating process: “We believe we’re good at stock-picking and avoiding potential traps with countries, but the next part is to boost the returns that we generate from our stock picking by putting convexity in the portfolio at accretive prices. So we buy mispriced assets to enhance the risk-reward.” 

Doug Stewart, CEO of BennBridge, commented: “Pembroke’s differentiated investment process, allows investors to access emerging markets sensibly in the absolute return space.” 

 

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Hugh Leask
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