Lazard spreads from Alpha to Omega

While Lazard would not comment on the plans for the fund, details obtained by Fund Strategy suggest the stock and sector constraints on Omega will be wider than on the existing Alpha fund. Whereas Alpha has a FTSE All-Share tracking error of 4-6%, Omega will not be managed in relation to any benchmark weightings.

It is also understood Omega will not invest in stocks as far down the market cap as Alpha. Whereas Alpha holds companies with minimum market capitalisation of £250m, Omega will invest in British stocks with a market cap of at least £1bn. By taking bigger stock and sector bets, and holding fewer companies, the group is believed to be launching Omega to be a more risky, less core proposition to the retail market.

Launched in November 1999, Lazard UK Alpha fund ranked 56th out of 255 funds in the IMA UK All Companies sector over three years to December 27, 2004, according to Standard & Poor’s. This followed a return of 12.2%, on a bid-to-bid basis, versus the sector average return of 7.4%. Over five years the fund is ranked 24th out of 216 funds in the sector, following positive growth of 6.7%.

At the end of December 2004, the fund had 48 companies in its portfolio, of which the top 10 accounted for some 51.7% of its assets. Its top three holdings were HSBC (9.1%), GlaxoSmithKline (7.8%), and the Royal Bank of Scotland (6.8%). The fund’s biggest sector bets were in financials (30%), resources (19.1%), and cyclical services (14.9%).
No details of the fund’s charges have yet been announced, nor whether it will charge a performance fee similar to some of the other more concentrated funds in the sector.