Gartmore is launching a UK Absolute Return fund only a few weeks after its European long/short product came to the market.
The fund will be based on the group’s Octanis hedge fund, which sits in the AlphaGen range, and will be run by the same manager, Ben Wallace, who has headed the strategy for five years. It will be a large-cap vehicle that invests in British equities using a market directional approach, not the European strategy, which is more market neutral.
Richard Pursglove, the head of UK retail at the group, says: “This is the next in a series of absolute return strategies we are bringing to the UK retail market.”
He adds that the Ucits III fund will not be a mirror of the Octanis vehicle because there are different liquidity issues and the former will be daily-priced. He also says it will have an inverse correlation to the market – when the British market was down 20% last year, Wallace’s hedge fund was up 30%.
Plans for this fund, which follows the launch on January 26 of the European Absolute Return fund, run by Roger Guy, were initially announced last autumn but were shelved because of volatile market conditions and a ban on short selling. Gartmore says it will develop further absolute return strategies to answer investor demand.
Several groups have moved into the absolute return market after the success of the BlackRock UK Absolute Alpha fund. Cazenove, Legal & General and Odey have launched or plan to launch strategies to go long and short and provide an absolute return regardless of market conditions.
Gartmore’s UK Absolute Return is due to go live in April, subject to regulator approval. It has no target return. Minimum investment is £1,000 and charges are 5% initially and 1.5% annually. A performance fee of 20% applies, subject to a high water mark.