Omam set to launch Prosper 80 fund

Old Mutual Asset Managers is to launch a capital protected multi-manager fund of hedge funds, which has a target return of cash plus 4% a year after all charges.

The Old Mutual Prosper 80 fund, which will only be available to investors through intermediaries, is to launch in September with minimum investment set at 5,000. Managed by the group’s multi-strategy team, the fund has a protected price of 80% of its highest-ever fund price. This means every time the fund price reaches a new high, the protected price will rise.

To achieve the target return the multi-strategy team, which is headed by Richard Tomlinson, can invest in both its internal hedge fund managers and externally managed mandates. However, rather than holding underlying funds, investments will be held on a managed account basis.

Tomlinson joined Omam from Bright Capital, with his colleague Chris Rule, in May last year. The following November they took over the running of the group’s offshore multi-strategy hedge fund, of which Prosper 80 is largely a retail version.

Simon Wilson, head of marketing at Omam, says: “The team will use quantitative methods to build an optimum portfolio with the right risk/return characteristics to achieve the target return. The accounts held within the fund will be diversified by manager, asset class, strategy and region.”

Omam seeded the fund in April this year with 22m and Wilson says that clients will already have committed an extra 20m by the time the fund launches.

Eligible for inclusion in Isas, Isa and Pep transfers, selfinvested personal pensions and small self-administered scheme pension arrangements, the open-ended fund features both daily pricing and daily dealing. It carries no initial charge and an annual management fee of 1%. There is also an annual protection charge of 0.9%, although the 4% target return over cash is net of all charges. The fund also has no lock-in period and no redemption penalties.

Mark Dampier (pictured), head of research at Hargreaves Lansdown, says: “Achieving a return of cash plus 4% after charges is a tall order, as you are looking at a return of between 10% and 11%. So, while I think there is a good place for these sorts of funds in the market, I need to understand how much volatility it will come with and what the downside risks are.”