‘Black Swan’ Firm Readies Australia-Focused Hedge Fund

Mar 21 2014 | 11:04am ET

Tail-risk specialist 36 South Capital Advisors is returning to its roots—or near them, at least—with a new “black swan” hedge fund for Australian investors.

The London-based firm, which got its start in New Zealand before moving to the British capital in 2009, plans to launch its Kohinoor Pacific Fund on April 1. The new vehicle has been seeded by an Australian institutional investor.

36 South said the time was right to launch such a fund, with volatility protection currently cheap. The vehicle will buy long-based options across asset classes, with up to 30% of assets dedicated to strategies designed specifically to protect against volatility in Australian markets. Most of the money raised will be invested in 36 South’s main Kohinoor Core Fund.

“It’s entirely conceivable that both bond prices and equity prices will move down together in the next serious downturn,” chief investment officer Jerry Haworth said. “Portfolio losses in this scenario will be exacerbated and the need for diversifiers will be greater than before.

36 South made its name in 2008, when its tail-risk strategy returned 208% as markets swooned.

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