Buoyed by a big year for its Verity Absolute Return Fund, New York-based Verity Capital has decided to merge its long-only fund into its Absolute Return fund, a long/short vehicle.
In a note to prospective investors, Verity called the two-year old Absolute Return fund “simply a superior product offering the up-side of our value-based equity selection with downside protection.”
The $12 million fund returned 18.34% last year, easily topping the Standard & Poor’s 500 Index, a feat all-too-infrequently achieved by hedge funds in 2006.
The Absolute Return fund invests in between 25 and 30 undervalued names, with a hedge utilizing shorted exchange-traded funds. The firms says it uses the same principles and metrics to evaluate both the long-only equity portion and to find the weakest market sectors in which to short ETFs. The fund has a $100,000 minimum investment requirement.