Tuono Readies Synthetic Absolute Return Fund

Nov 15 2006 | 3:35pm ET

Asset management firm Tuono Corporation is targeting Dec. 1 for the launch of its latest fund, the Tuono Multi-Series LLC Fund, which is aimed at institutional investors.

The new offering is a synthetic absolute-return fund, seeking to generate portable alpha through the customizable blending of complementary, non-correlated styles.

Michael Billy, CEO of the Naples, Fla.-based firm, said, “We are combining our core strategy with a quant component, which lowers volatility.”  He added that the volatility of the core strategy is 10%, and when mixed with the quantitative strategy, that figure is cut in half.

The two share classes that are being offered are the Tuono Multi-Strategy Absolute Return Series and the Tuono Multi-Asset Alpha Series.

The Absolute Return Series is a systematic options-arbitrage strategy focused on short- to medium-term gains versus long-term directional profits. The Alpha Series is a short-term, global macro strategy that trades financial futures, foreign currencies, individual equities and commodities. According to Billy, it capitalizes on market volatility, with a primary emphasis on directional returns.

The minimum investment in the new vehicle is $1 million. Management fees range from 1.5% to 2%, with performance fees in the range of 20% to 25%. There is a one-year lockup and redemptions are quarterly.

Man Financial and Goldman Sachs are serving as prime brokers and Spicer Jeffries and ATC Fund Services are handling the auditing and administrative functions, respectively. Edwards Angell Palmer & Dodge is serving as legal counsel.

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