Bloxham looks to analysis for AR fund
Bloxham will launch an absolute return vehicle next month using a stress-tested stock analysis model built to combat the worst market conditions.
The Dublin-listed Bloxham Midas Global Absolute Return fund, which will aim to return a minimum of of 8-10 per cent a year, using proprietary technical analysis model created by the company in 2003.
The model will search more than 2,000 global stocks and sectors every day. Four fund managers, led by Kevin McConnell, will use the data and macroeconomic factors to make investment decisions.
Bloxham will aim to identify overbought and oversold opportunities globally and detect emerging trends ahead of more traditional techniques.
Mr McConnell, also director of investment strategy, said: “We have designed the fund to learn from the mistakes the industry has made.
“The model has been stress-tested for more than 10 years and built to combat the worst market conditions evidenced post-Lehmans.
“The market has changed and we are living with very high volatility, extreme levels of liquidity drying up in markets and a situation where indices are becoming more difficult to trade on a fundamental basis.
“We are also dealing with highly correlated market conditions.”
Besides being able to go 100 per cent in cash, the fund is also aiming to produce its returns with less than 35 per cent of the S&P 500 index’s volatility.
The vehicle will feature a portfolio of between 25 and 40 stocks in defensives, early cyclicals, financials, late cyclicals and technology, and be biased towards developed markets.
A test portfolio has returned more than 27 per cent since June 2009, with a third of the market volatility and an average cash position in excess of 35 per cent.
A performance fee of 10 per cent will apply over a 3 per cent hurdle rate net of the annual management charge (AMC).
If the fund does not reach this target, no performance fee or AMC will be paid. There will be no initial charge.
The fund will launch euro share classes for the Irish market on October 1 and is expected to introduce a sterling share class for the UK market in November.