London & Capital Investment Advisors plans a series of absolute return products under the brand name Loncap.
The Loncap funds, set to launch next week, will invest in the parent company’s existing suite of products and includes six funds encompassing the Conservative, Balanced and Growth Fund, which include the Global Fund of Hedge Funds and Global Fixed Income Hedge products.
“These are interesting because they combine all the primary asset classes and the alternatives. So within those you’ll find traditional stocks and bonds, protected capital, commercial real estate and structured products,” said Tony McLoughlin, director and head of U.S. operations for L&C.
“At a time when the credit cycle is beginning its downturn and you see downgrades across the broad market, having protection in place is very important,” McLoughlin added. “Fixed-income has become more correlated to the equity market, particularly in the last five or six years. So if you put in protection within an equity portfolio, why shouldn’t you in fixed income?”
L&C’s existing US$159.7 million Global Fund of Hedge Funds, which began trading in June 2004, is up 4.41% this year. The multi-strategy fund of funds does not generally invest in U.S.-based hedge funds and is on the lookout for niche strategies such as carbon credit trading.
Also included are the Global Balanced Fixed Income Bond Fund, The U.K. Commercial Real Estate Fund, and The European Commercial Real Estate Fund. “We see a significant need for these types of products for institutional investors, in particular pension funds. In the last few years, they’ve suffered from a lack of long-term fixed income products,” said McLoughlin.
McLoughlin is currently marketing the funds via the firm’s U.S. investment arm to institutional investors and is looking to raise between $100 million and $200 million for each fund.
The funds will charge 1.5% for management and 20% for performance.