Tuesday, 30 August 2016
Last updated 16 hours ago
Jul 21 2008 | 10:37am ET
London-based VCM Fund Management is prepping a trio of hedge funds to invest in alternative energy, macro futures and emerging hedge fund managers.
The firm next month will launch two hedge funds in partnership with K2 Capital, the alternative energy hedge fund shop founded by former Vantage Derivatives head trader Andrew Swaine.
First up, the firm will offer the VCM K2 Alternative Energy Segregated Portfolio, a thematic, global equity long/short and derivatives trading strategy investing in companies positively affected by climate change with a specific focus on the energy sector. It uses a bottom-up approach to stock selection focusing on value companies in the long book, with an emphasis on large cap stocks.
“The portfolio’s large cap bias naturally creates a low volatility, which is further enhanced through protective hedging,” said the firm.
At the same time, the joint venture is also offering the VCM K2 Momentum Segregated Portfolio, a global, cross-asset discretionary macro fund with a short-term, opportunistic trend-following strategy triggered by breakouts and pricing anomalies.
Both Cayman Islands-domiciled vehicles, to be managed by Swaine, charge a 2% management fee and a 20% performance fee, with a US$100,000 minimum investment requirement.
Later in the fall, VCM is will unveil its hedge fund seeding vehicle, the VCM Optimised Seeding Fund, to invest in emerging managers, according to VCM co-founder Simon Clowes.
“Even though a large volume of research suggests that emerging managers outperform large, established hedge funds, investors increasingly are avoiding early-stage hedge funds,” said Clowes. “The number of new fund launches is at a seven year low, indicating it is very difficult for start-up funds to launch without a strategic partner. At VCM Fund Management, we are seeing approximately triple the inquiries from potential managers compared to 2007 and the quality of managers has similarly improved.”
Clowes noted VCM’s seeding fund differs from other offerings in that it independently controls the infrastructure for all the funds it invests in, ensuring full portfolio transparency and mitigating operational risk.
“Our method of allocating seed capital differs from the traditional approach, whereby a static allocation of capital is made for a two-to-three-year period,” he said. “We will allocate a relatively modest amount of capital on day one; but systematically add to that over time, so long as certain performance targets are met. This is a more efficient use of capital and it ensures that a good performing start-up manager will have grown assets to a level where institutional investors can participate once his track record has been established.”
The Optimized Fund will invest in equity long/short, event-driven, volatility, equity-market neutral and managed futures strategies. initially allocating between US$10 million to US$25 million to new funds.
There is a two-year lockup and a US$5 million minimum investment requirement for the Optimised Seeding fund.