Aquila Offers Market-Neutral Hedge Fund

Apr 14 2008 | 10:21am ET

The fund launched in February with some $20 million, which has since risen to $50 million. It will follow the same market-neutral strategy as its offshore predecessor, the SVMN Offshore Fund, which derives its returns from a combination of multi-asset investing and a behaviorally-driven tactical asset allocation overlay. Since, the fund has returned over 10% annually with a volatility of 8.5%, and zero correlation to stocks, bonds and hedge funds, according to the firm. The fund returned 15.4%, net of fees, last year.

The SVMN fund seeks optimized exposure to assets that provide systematic risk premiums, such as equities, bonds, short-term interest rates and some energy commodities, according to fund documents.

The portfolio manager is Harold Heuschmidt, who worked for American Express, Morgan Stanley Equity Derivatives and Credit Suisse First Boston Equity Derivatives prior to joining Aquila. The SVMN Fund is UCITS III-compliant and offers daily pricing and daily liquidity. It charges a 15% performance fee subject to high-water mark and a 1.6% management fee. 

Aquila’s managing partner Andi Stuetz, who is currently shopping the firm’s Okeanos Shipping Fund, which practices arbitrage between forward shipping contracts and physical shipping, said the firm is also in  the process of launching a carbon fund that will exploit the Kyoto protocol clean development mechanisms.

The firm raised a total of US$200 million last year for the private equity offering and is in the process of raising a further US$250 million.

“The fund is investing in carbon emission reduction projects and you save by putting in simple filter mechanisms in power plants and reduce the carbon emission by a few million tons per year,” said Stuetz.

Hamburg, Germany-based Aquila Capital, a $2.2 billion hedge fund shop, has launched the Statistical Value Market Neutral Fund, which it deems the next generation in absolute return funds.

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