Specialist convertible bond manager Acropole Asset Management has announced plans to launch its first alternative fund, Acropole Convertibles Arbitrage, to add to its existing product rang
Specialist convertible bond manager Acropole Asset Management has announced plans to launch its first alternative fund, Acropole Convertibles Arbitrage, to add to its existing product range of two long-only funds, Acropole Convertibles Europe and Acropole Convertibles Monde, and one long-only dedicated fund.
Acropole Convertibles Arbitrage, which will be launched with EUR80m in funding, is planned as the first in a series of alternative management offerings, with a second alternative fund set for launch in the autumn.
The new fund aims to obtain an absolute performance by capturing opportunities linked to movements of the convertible bonds’ implied volatility, achieving positive returns whatever the direction of the market.
Its strategy consists of extracting the value of the option contingent to the convertible bonds by systematically covering the equity, interest rate and credit risks. Consequently, its strategy consists of structurally buying convertible bonds and selling the underlying share. The asset allocation will be carried out with no geographical or sectorial predominance among the main international markets, the currency risk being covered.
The investment process involves quantitative analysis of the convertible bond global universe and fundamental analysis of the convertible bond’s parameters to isolate volatility, taking advantage of the volatility movements and covering the other risks. The portfolio is composed of the 40 best opportunities.
Acropole Convertibles Arbitrage will target institutional investors, notably private banks and pension funds seeking absolute returns with a contained volatility level. The fund is also aimed at both traditional and alternative funds of funds that are looking to build or strengthen their convertible arbitrage strategies, and for which stability and the pureness of the investment style constitute an asset. Individual investors also will be able to invest in the fund, for instance through life insurance vehicles.
Founded by Jacques Joakimides, Emmanuel Martin, Nathalie Sabathier and Hubert Lemoine, Acropole Asset Management says it is the first French asset management company completely dedicated to convertible bonds. The founding members own 51 per cent of the company’s shares, while Cheyne Capital Management owns 33.5 per cent, UFG Investment Managers 14.5 per cent and Matmut 1 per cent.
Chief executive Joakimedes was previously head of European convertible bonds at West Asset Management between 1995 and 2002 and subsequently chief investment officer for convertible bonds at Fortis Investments. He began his career in 1973 as a portfolio manager with Axa and has also worked for Caisse Centrale du Crédit Mutuel, Groupama and Credit Mutuel Finance.
Chief investment officer Martin was head of convertible arbitrage funds at Fortis Investments between 2004 ad 2006 after having held the same post at Barep, having started his career as a convertible bond trader and then head of the equity derivatives desk at Crédit Industriel d’Alsace et de Lorraine. Head of development Sabathier was in institutional sales for first BTP Gestion and then Fortis, while senior investment manager Lemoine was head of the convertible bond sales desk successively at Schelcher-Prince Finance, Oddo Securities and Ixis Corporate & Investment Bank.
Acropole currently has EUR320m of assets under management through its two long-only funds covering the European and global markets, Acropole Convertibles Europe and Acropole Convertibles Monde, as well as the dedicated funds. The firm has target a more than doubling of its assets under management to EUR800m by the end of next year.