Absolute Return  

Old Mutual launches yet another Absolute Return fund

Old Mutual launches yet another Absolute Return fund

Old Mutual Global Investors (OMGI) intends to launch the Old Mutual Style Premia Absolute Return fund at the beginning of December.

The Ireland-domiciled Ucits fund will have a volatility target of 8 per cent and aims to deliver positive total returns on a rolling 12 month basis, uncorrelated to bond and equity markets.

The strategy seeks to capture returns via exposure to a range of systematic investment styles, or style premia, generating long-term results across markets and asset classes.

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The core underlying styles are value, quality, momentum and carry, across equities, fixed income and currency asset classes.

In addition the fund will use OMGI’s proprietary statistical arbitrage strategy, seeking to provide additional diversification benefits and downside protection during ‘risk-off’ environments.

According to lead manager, Leif Cussen this is a significant differentiator to existing products, as its returns can exhibit low correlation to other style premia during drawdown markets.

Mr Cussen said this should appeal to investors that are concerned about the crowding risk often associated with style premia products.

He will be supported on the fund by Paul Simpson and John Dow as portfolio managers, both of whom have significant experience in developing and managing liquid alternatives products.

In addition to the management team, a style premia investment committee will provide an additional level of support, oversight and governance to ensure that the fund remains in line with customer expectations.

Patrick Connolly, Certified Financial Planner at Chase de Vere, said there is an ongoing and growing demand for absolute return funds at a time when investors are nervous about the prospects for other asset classes.

However, he said this is becoming a crowded space and many of the funds on offer are mediocre at best.

Mr Connolly said: “While this fund may have some merit, it will be a challenge for it to stand out especially as Old Mutual already has four absolute return funds in the sector and one of those is down by 10 per cent over the last year.”