Old Mutual Global Investors has launched a new UK mid- and small-cap liquid alternatives fund. The Old Mutual UK Specialist Equity fund, will be domiciled in Ireland and will be managed by Tim Service, a fund manager of UK equities while the fund’s deputy manager will be Luke Kerr. The fund aims to achieve capital appreciation by taking both long and short positions in UK equities outside the FTSE 100 index.
A mirror of the existing Cayman-domiciled fund, which launched in 2003, the fund will hold a range of between 80 and 110 positions and will have a net exposure of between -20 per cent and +20 per cent Nav.
The minimum investment for the fund depends on which platform the client buys the fund from, which can start at £500, and for the clean class the annual management charge is 1 per cent.
It is an interesting time to be launching a UK fund, given the volatility seen in markets earlier this year, and the upcoming EU referendum causing more uncertainty. Being domiciled in Ireland may help with any potential currency risk that could happen if the UK votes to leave the EU, by not having direct exposure to sterling.
The fact the fund is focusing on small- and mid-caps means it may see better returns than funds investing in large-caps. Small-caps in particular tend to have more opportunities and room to grow. The management team also has enough expertise within the space when dealing with macro issues.
The fund will use a top-down macroeconomic analysis and also use bottom-up stock picking to structure the fund.
The fund will mirror an already successful fund, also managed by Mr Service, which has seen strong returns of 8.4 per cent annualised over three years, and 7.5 per cent over five.
This already existing fund can help investors look at how well the manager performs in previous market cycles. So while now may not be the best time to invest in the UK, this fund may be an option for those who want a slightly more protected entry to UK companies.