25 Jan, 2008
Published: 10:40 Friday 25 January 2008
By: Nicholas Paler, Investment Reporter
Cazenove Capital Management is planning to
bring the shorting skills of star income manager Tim Russell to
bear on the retail market.
The firm aims to launch two absolute return focused funds managed
by Russell and his former HSBC Investments colleague Chris Rice
respectively, who handle the firm's existing UK Growth & Income
(Cazenove UK Growth & Income A Inc) and European (Cazenove
European A Acc) funds.
Russell would take the helm of the UK equities fund while Rice
would run the pan-European vehicle.
Since 2003 Russell and Rice have run a range of Cayman-domiciled
hedge funds which can also be accessed through Cazenove Absolute
Equity, (CAEC) a closed-ended fund of hedge funds.
Cazenove's managing director of specialist investment management,
Robin Minter-Kemp said the firm wanted to replicate the managers'
objectives, expertise and experience on those funds within an Oeic
'There are some operating issues to resolve, but ideally we are
looking to offer the products to the market at the end of the
second quarter, and crucially for the fund managers it should be
portfolio construction as usual as we are trying to replicate what
they already do in a different wrapper.
'Their existing hedge funds are targeted to achieve 10% net return
each year with approximately a third of market volatility. Their
track record in risk and return is well suited if repeated within
the Ucits III investment powers, and by doing this we would be
offering our hedge fund skills to the wider market.'
If the funds were launched they would likely be compared to Mark
Lyttleton's Blackrock UK Absolute Alpha fund, which has captured
the imagination of advisers since its launch into the retail market
Lyttleton's fund uses derivative techniques to take both long and
short positions on stocks, offering retail investors the chance to
exploit opportunities in both rising and falling markets.
It has already taken inflows of £377m as of the end of
December 2007, with that figure set to rocket in the coming year as
investors seek a solution in more turbulent markets.
Minter-Kemp said Cazenove's planned offerings would allow advisers
and the discretionary market to look outside the life industry and
the cautious managed sector for defensive funds, as well as appeal
to retirees looking to protect wealth and gains made in the bull
'Most people want wealth preservation when they retire, and
absolute return products are ideal for that,' he said.
Final details remain unconfirmed about the products, but
Minter-Kemp said Cazenove was considering domiciling the funds in
either the UK or Dublin.