Veritas Asset Management has revealed details about the Dublin-based Real Return Alternative Strategies fund that will be launched in April or May.
The fund, which is to be managed by Ian Fridlington, is to be run on a top-down and thematic basis.
“We will identify macroeconomic themes and then select funds within these themes,” says Fridlington. “We may use exchange traded and passive funds as well as actively managed funds.”
The fund is to invest in long only and alternative investments, including hedge funds. Among the hedge fund strategies that will be held are volatility traders, market neutral long/short funds and currency managers.
Fridlington says he has identified several themes for when the fund is launched. These include natural resources through long/short funds.
“There is an attractive supply and demand dynamic but we will use long/short managers because of the volatility,” says Fridlington. “Nickel, for example, fell by 50% at one stage last year.”
The fund will hold managers who invest in distressed debt and alternative sources of finance. Fridlington argues the latter will come to prominence as bank lending is being reduced. This includes trade and asset backed financing.
Fridlington says the fund will also use the trade and asset-backed financing theme in Latin America.
He adds: “We have a couple of managers who invest in companies six to 18 months before their IPOs [initial public offerings] in London. Many of these companies are based in emerging markets.”
Fridlington says the fund will hold 20-30 funds, which he believes provides sufficient diversification. “Academic studies suggest this is the ideal number. Any more funds might dilute returns.”