Blacksquare Capital has launched a UCITS III-compliant fund of hedge funds with an obsessive eye toward uncorrelated returns and a set volatility.
The new IFSL Blacksquare Diversified Absolute Return Fund—the firm’s second after last year’s Mult-Manager Absolute Return Fund—is targeting 8% volatility and market-neutral returns. The new vehicle will not invest in any hedge fund with a correlation to high-yield bonds or stocks higher than 0.4 over a three-year period, CEO Christopher Peel told the Financial Times.
It also won’t invest in any funds that its Multi-Manager fund invests in.
“There is no overlapping in our two portfolios,” Peel said, explaining the fact as a function of the funds’ volatility targets.
The Diversified fund will put 70% of its assets in UCITS-compliant hedge funds, with the remaining in liquid securities such as exchange-trading funds, stocks and sovereign debt. All of the funds it will invest in offer daily liquidity.
Blacksquare said the new fund will not charge performance fees, but will have an load fee of up to 5%. It charges 1.5% for management.