Friday, 21 October 2016
Last updated 3 hours ago
Sep 27 2011 | 1:38pm ET
"Black swan" hedge fund shop Universa Investments plans to launch a macro fund to profit from what it sees as mispriced options.
The Santa Monica, Calif.-based firm hopes to raise $1 billion for the new fund. Like Universa's other hedge funds, the Convex Macro Fund will be a convexity fund, seeking out trades with the potential for huge profits with minimal risk, Bloomberg News reports.
That strategy has helped the $6 billion firm's inflation funds soar 20% this month—and 35% this year. Universa bought up put options on gold—at prices that founder Mark Spitznagel told Bloomberg were "ridiculously low"—to profit from the recent drop in gold prices.
The Macro Fund will use the best ideas generated by Universa's investment partnerships, which seek out tail risks. It will invest primarily in index options, but will also put money into commodities, currencies, equities and other investments.
Universa is targeting both existing and potentially new investors for the Macro fund.