During times of uncertainty and high volatility, one Boston-based hedge fund is trying to live up to its name with a new offering designed to capture higher returns than government or blue-chip corporate bonds while, at the same time having less volatility than equity funds.
Minuteman Capital Management has launched its Minuteman Income Fund, which writes out-of-the-money put options on undervalued stocks to generate profits.
When the fund does exercise its options, it purchases the underlying stocks at bargain prices and realizes significant gains as the stocks return to fair value, according to fund documents.
The fund is targeting 11% annual returns with half the volatility of the Standard & Poor’s 500 Index.
Earlier this year the rookie hedge fund shop launched its eponymous long/short offering investing in a diversified portfolio of those undervalued stocks. However, the fund has met the same fate as many of its brethren, dropping 7% through September.
Minuteman Capital was founded by Calvin Wilder, a former equity analyst at hedge fund Media Group Investments. Wilder also founded Thrive Networks, an IT outsourcing company, and sold it to Staples.