For its newest fund of hedge funds, Permal Group is looking at one of the oldest trade routes in the world. The New York-based firm is gearing up to launch the Permal Silk Road Fund at the end of November.
As its name suggests, the fund will concentrate on managers focused all along the ancient commercial highway, including the Middle East and North Africa, Asia ex-Japan, the former Soviet Union and Turkey.
Silk Road will invest with between 20 and 30 underlying managers initially, eventually rising to as many as 40 within two years. One-third of the fund’s assets will be invested in Asia-focused managers, another third in the Middle East and North Africa. The remaining third will be put with global strategies to keep the fund of funds liquid and diversified.
Strategically, Permal plans to invest 40% of the fund’s assets with event-driven managers and 25% in equity long/short. Both global macro and long-only will represent 15% of the fund, with the remaining 5% in fixed-income investments.
Silk Road is targeting returns of between 15% and 20% annually, with volatility of about 12%.