Old Mutual Global Investors (OMGI) is to launch a new alternatives hedge fund, the Old Mutual Style Premia Absolute Return Fund, at the beginning of December.
The Ireland-domiciled UCITS fund, known as STAR, will be the latest addition to the business’s suite of systematic liquid alternatives products. OMGI, part of the Old Mutual Wealth operation, has significant experience in this space, currently managing £7bn in hedge fund strategies, the firm said in a statement announcing the launch today.
STAR will have a volatility target of 8% and aims to deliver positive total returns on a rolling twelve month basis, uncorrelated to bond and equity markets.
The strategy seeks to capture returns via exposure to a range of systematic investment styles, or style premia, generating long-term results across markets and asset classes. The core underlying styles are value, quality, momentum and carry, across equities, fixed income and currency asset classes.
In addition STAR utilises OMGI’s statistical arbitrage strategy, seeking to provide additional diversification benefits and downside protection during ‘risk-off’ environments.
STAR’s lead manager, Leif Cussen, pictured left, has worked on OMGI’s systematic alternative products since joining the business in 2005, including co-developing OMGI’s statistical arbitrage strategy. Leif will be supported on the fund by Paul Simpson and John Dow as portfolio managers, both of whom have experience in developing and managing liquid alternatives products.
In addition to the management team, a style premia investment committee will provide an additional level of support, oversight and governance to ensure that the fund remains in line with customer expectations.
“STAR is designed to meet a growing demand for cost-effective systematic strategies, said Cussen. “The fund gives investors access to the diversifying benefits of four core systematic styles across multiple asset classes. In addition, it utilises our statistical arbitrage capability to further enhance diversification and mitigate crowding risks typically associated with style premia exposures”
Donald Pepper, managing director of alternatives, added: “Old Mutual Global Investors has a strong heritage in managing low correlation alternatives, having launched its first quantitative equity market neutral hedge fund in December 2001. STAR is designed to have a very low correlation to traditional assets.
“We believe the strategy will be a good diversifier to market driven exposures. Further, given its long/short orientation, we see the strategy as a complement to hedge fund strategies, but at a significantly reduced cost.”