Called the TM Sanditon Select funds, the two absolute return products will be largely non-directional, meaning they should sidestep major swings in the performance of the overall stockmarket. They will be relatively diversified portfolios that aim to beat inflation while displaying low volatility, and they will both be based in the IMA’s Targeted Absolute Return peer group.
Mr Russell has launched Sanditon Asset Management with his former Cazenove Capital colleague Chris Rice and the business gained FCA authorisation on May 27 this year.
Investment Adviser understands the firm will early this week announce it has reached its target of raising £50m for its pan-European investment trust launch, following the close of the public share offer today (Monday June 23). The open-ended fund range was first announced late last year and the firm has since been developing a Ucits-compliant structure ahead of a full retail roll out, subject to FCA approval.
The group is expecting to launch the first Sanditon Select fund, a European absolute return product, in August.
It will be tasked with delivering returns 2 per cent ahead of the European Harmonised index of Consumer Prices measure of inflation in order to reach its performance fee hurdle.
The second of the Select funds, targeting UK equities, will launch later this year and aim to beat UK Retail Prices’ index inflation by 2 per cent.
The group is also set to launch a long-only European equity fund, called TM Sanditon Europe, in September as well as another UK long-only fund later in the year – the name of that fund is not yet decided.
Mr Russell said the group was also considering adding to the range with an equity income launch at a later date.
He said Sanditon would later look to develop further products in areas such as global and Far East equities should it become possible to hire in suitable investing teams.
The funds will all build on the business cycle investing process Mr Russell pioneered in his time running hedge funds for Cazenove, which he joined in early 2003 before leaving in July 2011 ahead of its sale to Schroders in 2013. Mr Rice also worked under the process and his Cazenove European fund delivered a 129.3 per cent return in his tenure from December 2002 to June 2013, against a sector average 106.2 per cent gain.
Other notable fund managers who are former protégés of Mr Russell include UK equity star Julie Dean, who continues to work at Schroders. The team originally worked together at HSBC before joining Cazenove.
The Sanditon Investment Trust, set for launch later this week, is set to purchase a major stake in the management company along the same lines as Nick Train’s Lindsell Train Limited investment trust.
In this case the Sanditon trust is expected to own roughly 20 per cent of Sanditon Asset Management. Investment Adviser in June 2013 reported that Lindsell Train had become a 15.8 per cent position in the investment trust, from 0.5 per cent at launch.
Mr Russell has pledged to his clients not to dilute the trust’s earnings by launching further C-Share issues at a later date, so the size will only be determined by investment growth or losses.
