Cazenove Retail Hedge Fund’s Slow Start

Feb 22 2010 | 11:02am ET

Launched with a bang, a Cazenove Capital Management retail hedge fund is likely to remain cold to new investors for some time.

The firm’s Absolute U.K. Dynamic Fund, which sucked up £123 million in just two weeks after its launch in September, will remain closed to new investment for another six to nine months, the Financial Times reports. The firm hopes that the extra time will give the fund a chance to boost its performance, which has been basically flat since inception.

Absolute U.K. Dynamic is modeled on Cazenove’s U.K. Dynamic Absolute Return Fund, and boasts the same managers as the hedge fund, Paul Marriage and Neil Pegrum. But unlike the Absolute Return fund, U.K. Dynamic is open to retail investors.

Marriage blamed the new fund’s slow start on the recent market rally.

“We predicted it would take us eight to 12 weeks to get invested, given our small- and mid-cap bias and the liquidity headwinds involved,” he told the FT. “But we launched on the day Kraft tabled its initial bid for Cadbury, which created a strong upward shift in the market and people’s expectations for equities.”

“It would have been easy to start quickly, but we took a step back and invested carefully, so it took us longer to build the portfolio,” he explained. The fund is now fully invested, and targeting between 15% and 16% annual returns.


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