Fusion Capital Launches ETF Hedge Fund

Aug 3 2007 | 11:59am ET

Southpointe, Pa.-based Fusion Capital Management is making its entrance into the hedge fund space via exchange-traded funds. The firm recently launched Global Fusion Partners, a global macro multi-strategy fund that exclusively trades ETFs.

The fund seeks to fuse fundamental valuation techniques and behavioral finance, focusing on using ETFs and ETF options, according to firm documents.

“The 15 to 20 ETFs in our portfolio provide broad diversification across the market, consisting of over 2,000 underlying securities,” said Cliff McNary, managing director. “This helps us mitigate risk while enhancing returns through the selective use of leverage, short selling and option trading.” 

The $5 million fund launched on May 4; it is up over 5% through the first week of July.

“Two weeks ago there were some indicators that said we should be more cautious, so we pulled back our net exposure to 80% and that helped us through the rocky market last week,” McNary said. “Our current shorts are predominantly in housing and real estate and we saw that coming a few months ago.”

McNary and Scott Dooley, alumni of Pittsburgh broker/dealer Blue Vase Securities, formed Fusion late last year.

The fund charges 1% for management and 20% for performance, with a $100,000 minimum investment requirement. It sports a one-year lockup and quarterly redemptions with 60-days notice. For the first $10 million, lead investors who pony up $250,000 get to share in the firm’s profits of 0.5% paid annually over a 10-year span.

McNary also mentioned that the firm is also prepping a British Virgin Islands-domiciled offshore fund and is waiting for initial allocations from investors. “ETFs are burgeoning and we think there’s an opportunity to get on that wave,” he said. 

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