London-based wealth management shop Rathbone Investment Management has launched a second multistrategy fund for risk-averse investors looking for broad exposure to traditional and alternative asset classes.
The firm in November launched the Capital Preservation US Dollar Distributor Fund, which invests predominantly in hedge funds and structured products, as well as cash, fixed-income, equities, property and commodities. Its primary aim is to deliver to investors LIBOR plus 2% annual returns over a rolling three-year period with a targeted maximum drawdown of 3% per month.
The fund, which currently manages US$36.21 million, is living up to its billing returning 2.73% in its first two months of trading. The portfolio manager is David Coombs, who joined the firm in 2007 from Baring Asset Management where he was head of multi-manager investments.
In an interview, Coombs cautioned investors to dig deeper when looking for absolute return managers to spice up their portfolios.
“Different managers have a different understanding of the term,” said Coombs. “Some purport to bring positive returns in all conditions, but relatively few do. Some simply mean that they are not constrained by benchmarks; this is more common and means the fund can target anything from a low cash return to an equity return.”
“Once you've established what the manager intends to do, look at past performance in both a positive and negative markets - don't simply look at smoothed returns over the long term. You want someone who does well in both types of markets.”
Coombs also manages the Managed Growth Euro Distributor Fund PC, which launched in October 2007 and has a similar focus to the new offering. The Managed Growth Fund dropped 31.57% last year.