UK-based Blacksquare Capital has launched a multi-manager UCITS III-compliant fund that will seek to target annualised volatility of 8 per cent: one of the first ever multi-manager
UK-based Blacksquare Capital has launched a multi-manager UCITS III-compliant fund that will seek to target annualised volatility of 8 per cent: one of the first ever multi-manager funds to follow such a mandate. The rationale, unsurprisingly, is to generate higher returns. Entitled the IFSL Blacksquare Diversified Absolute Return Fund, it will attempt to deliver positive uncorrelated returns across four main asset classes – global equities, bonds, FX, commodities – with a heavy bias on the equity and bond markets. The fund is a sub-fund of the IFSL Blacksquare Capital Fund, a UK-based OEIC regulated by the FSA, and follows last year’s launch of the IFSL Blacksquare Multi-Manager Absolute Return Fund: a more conservative fund that targets four per cent volatility. “We’re trying to develop a suite of products that IFAs are increasingly profiling their clients for – low, medium, high risk. This new fund has been created in response to our clients wanting slightly more risk,” said Christopher Peel (pictured), a partner at Blacksquare Capital, in a telephone call with Hedgeweek. He said that by developing these funds, where the volatility is clearly communicated, it would help fund selectors become more intuitive when making recommendations based on clients’ risk profiles.
The fund has been seeded with GBP1.5million of partners’ money, with Peel confirming: “We’d like to have raised GBP25million from retail investors and GBP50million from institutional investors by year-end.” He said that the transparency and liquidity of the fund was appealing to pension funds and insurance companies who tend to be more skewed towards bonds. “The market is coming to us,” said Peel. But he stressed that this was a retail, not an institutional, product. “It’s much easier to offer this fund to the UK retail market as there are no others like it currently competing in the space,” explained Peel. “Offering an unlevered fund with 8 per cent volatility is a very original mandate.” The fund’s portfolio is composed of 13 fund managers, with Peel confirming that the firm doesn’t invest in any fund with a 0.5 per cent correlation to the equity markets. “If three managers start correlating to one another we would have to reduce holdings,” said Peel. The portfolio’s biggest holding is GAM Star Keynes Quantitative Strategies (13.5 per cent). The fund will be available on a number of retail platforms including Hargreaves Lansdown, Raymond James, Novia and Skandia. BNP Paribas Securities Services will act as administrator, custodian and registrar, with Ernst & Young as auditor and RBS as the fund’s depositary.
