L&G Investment Management will launch its first absolute return fund next week, the Diversified Absolute Return Trust (Dart). David North (pictured), the head of asset allocation at the group, will be lead manager and Ben Gill will be deputy.
The strategy of the fund, which will be launched on November 11, involves macro hedge fund techniques designed to protect investors from downside risk. Interestingly, the portfolio will be constructed purely in relation to macroeconomic viewpoints.
“Macro calls are very important right now,” North explains. “Before it was all [about] bottom-up [research]. But the liquidity and leverage that was there before isn’t coming back. So it’s not [about] micro anymore, it’s macro. This fund is about best ideas from a macro perspective.”
In addition to North and Gill, there will be two economists, two strategists and two analysts working on the portfolio. They are: James Carrick, Tim Drayson, Ben Bennet, Georgina Taylor, David Bayliffe and Nick Tidswell.
The fund, which will stay predominantly in large liquid markets, will consist of between eight and 10 macro themes and will not be constrained. With the aim of producing positive returns regardless of market direction, the fund will use a range of options, futures and stop-losses.
It will take both long-term strategic and short-term tactical positions and its exposure will be achieved using derivatives only. An in-house paper portfolio managed under the same strategy returned 7.5% from September 1 to October 22.
The L&G Dart fund will be launched with £50m of seed money. The initial charge will be 5%, while annual management fee will be 1.5%. Minimum investment is GBP500.