London Firm Readies Multi-Strat Hedge Fund

May 28 2010 | 8:07am ET

A former London-based prop trading firm is branching out into the world of asset management with a new a multi-strategy fund.

Alternative Asset Management Ltd (A2ML) on June 1 is launching the Megalio Fund, which will offer investors a medley of strategies to satiate their risk appetites.  The fund is comprised of six subfunds including a macro fund, two currency funds, a long-term global equity fund, and a short-term, single-market (DAX) currency fund.

Nicholas Edwards, the firm’s chief executive, said he sees continued volatility in global currency markets as governments try to issue new bonds to re-finance and repay debt as it falls due. Edwards added that the continued above average volatility in global equity markets is an ideal environment for short term trend following traders. 

“Long/short funds will outperform a generally stagnant equity market outlook. Overall, as long as we don't return to low volatility trending markets, the trading funds should continue to outperform. This is why our new Megalio Fund range is focused on vol trading, currency trading and equity markets trading as oppose to core 'buy and hold' strategies,” Edwards told FINalternatives.

The firm was founded some five years ago as a prop trading firm and has just recently begun to market funds to outside investors. The Megalio Fund is a rebranding of an existing Cayman Islands-based master feeder structure dubbed the Alternative Vision Fund, which launched in 2007 but remained dormant for a few years. The stock market crash of 2008 spurred the firm to abandon its prop trading business for partnerships with other firms such as Cazenova Capital Management to manage and distribute funds to investors.

In addition to its new volatility fund, the firm also manages a range of UK and European equity absolute return funds in a partnership called the Cazenova Funds. Edwards said A2ML is currently mulling a UK commercial real estate Islamic compliant fund to be launched within the next few months.

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