Managed Account Strategy Targets Hedge Fund Investors

Feb 17 2006 | 12:00am ET

The Tuono Corp. is readying to launch its first fund, a hybrid managed account product with hedge fund characteristics. The T-Circle Partners Fund, which will launch March 1, will invest in derivatives—both futures and options—and will be aimed at institutional investors that have a long-term perspective and who would like to invest in alternatives, but prefer the transparency and accountability offered by managed accounts.

“Managed accounts are more preferential to many clients, segregation is important,” said Michael Billy, ceo of the Naples, Fla.-based firm.

The fund will initially be capped at $25 million, and there is a minimum investment of $1 million.

Tuono eventually plans to create a pooled hedge fund vehicle that would maintain the structure and strategy of the managed accounts. Tuono will not charge a traditional management or incentive fee. Instead, when the fund reaches its stated monthly target of 1.25% net per month—or 15% net per year—the fee structure will kick in and be based upon performance.

Billy prides himself on creating a transparent fund, saying that on the heels of the hedge fund scandals of the last year, such as the collapse of the Bayou Group, investors are ready for more transparency and accountability.

Billy has been running a similar fund with partner money since 2003 and has seen net returns since inception of 115%. “Once you look at the 32-month track record we can certainly say that we have consistency and reliability,” said Billy. 

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