Investments  

Lazard merges its Alpha and Omega funds

Lazard merges its Alpha and Omega funds

Lazard is planning to merge its £81.9m UK Alpha fund with its much smaller UK Omega fund.

Lazard said the merger, which has FCA approval but still needs shareholder approval, will help the £1.3m UK Omega fund achieve critical mass.

Alan Custis, who currently co-manages both funds, said: “The UK Omega fund reached critical mass after it was launched but has since lost assets.

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“Once a fund is small in size its hard to grow organically so we decided to use the merger to inorganically grow the fund.”

The fund suffered a period of underperformance leading up to 2008, which saw it lose assets. However, in 2008 Lazard decided to remove risk parameters on the fund, which had meant the fund could only certain weighting to each market sector.

The fund has performed strongly since, returning 5.9 per cent annualised from inception to the end of December last year, while the index, the FTSE All-Share returned 4.5 per cent in the same period, according to its latest factsheet.

Mr Custis explained that the benchmark-aware UK Alpha fund had been a good product at the time of launch in 1999, but that the “world has moved on” since then.

Benchmark aware funds have come under pressure recently as many supposedly actively managed funds are being accused of being “closet trackers”, differing little from their index despite charging high fees.

The new merged fund will aim to deliver the benchmark plus 4 per cent return.

Should the shareholders approve the move on February 25, the two portfolios should be merged on February 27.