DMS Asset Management is set to launch a micro fixed-income relative value hedge fund in the second quarter. David Sukoff, principal, said he is aiming to launch the fund with between $30-50 million in capital commitments and will hold a firm close when assets under management reach $100 million.
“By capping the fund and keeping it small we will be better able to focus on our core strategy,” Sukoff said. Sukoff was previously a portfolio manager for the Precept Fund, a fixed-income arbitrage fund that he co-founded in early 2002 with Chris Danielian.
Last year the two wound-down the fund, which at its height had around $450 million in assets under management. “Precept grew very rapidly and got too large. The second half of 2004 and [all of] 2005 was difficult for fixed-income, and that, combined with the large size of the fund, led to mediocre performance which caused us to wind it down,” Sukoff said.
After taking some time to reflect, Sukoff felt that there was room to make strong returns in fixed-income arbitrage, provided a fund was kept at a manageable size. For this reason, he will hold a soft close of the DMS Fixed Income Micro RV Fund at $50 million and a hard close at $100 million. Investors in the fund include some of Sukoff’s previous investors, “but given its target size, the target audience is different,” he said.
He is currently targeting smaller fund-of-funds, family offices and individuals. Other terms of the Summit, N.J.-based fund include a minimum investment of $1 million, a 1.5% management fee and a 20% performance fee, and a 1-year lockup.