Egran Capital Group has recently launched its first hedge fund with $100,000 in assets under management. Evan Granovsky, managing partner of the Forest Hills, N.Y.- based fund, said the firm employs a strategy of betting on index spreads on the Standard & Poor’s 500.
“Spread consists of two positions, one long and the other short. The long position is usually deep in the money and the short one is at the money or close to it,” said Granovsky.
He added that the long position expires in six or nine months and the short expires in one or two months.
“The time premium of the short position (per month) is much higher than the time premium of the long one. This, in fact, creates an opportunity to profit when the market is more or less neutral,” he said.
Granovsky, who was a stockbroker for 11 years, has been running an account with the same strategy with his own money since May 2003. This account has produced net returns of 40% per year. Granovsky is now actively seeking outside investors for his new fund.
He isn’t using a third party marketer, describing the cost as “prohibitive at this point.” The minimum investment is $100,000 and the fees are 1.5% for management and 20% for performance.