Sarasin GlobalSar IIID and Sarasin EquiSar IIID combine the features of traditional Oeics with the wider investment powers of Ucits III. Sarasin believes the funds have 75 per cent of the features of offshore hedge funds of funds but within a fully regulated environment.
Sarasin says that traditional funds are still attractive but they can be volatile as the returns depend on whether stockmarkets go up or down. In contrast, the new funds should be able to perform in all market conditions because they have more tools available to them, such as derivatives.
Sarasin chief investment officer Guy Monson will manage the new GlobalSar fund with head of global balanced funds Daniel Briggs Monson joined Sarasin in 1984 and became manager of the flagship GlobalSar family of funds n 1988. Briggs joined Sarasin in 2002. He has 20 years’ experience within Rothschild Asset Management, Schroders, Henderson and JP Morgan.
Like the original Sarasin GlobalSar fund, which was launched 18 years ago, Sarasin GlobalSar IIID takes a thematic approach to investment. These are global pricing power, efficiency and automation, intellectual property and innovation, global convergence and corporate restructuring.
Themes are identified following macro analysis and stocks will be selected if they are likely to benefit from these themes.
The fund will invest across different asset classes including global equities, government and corporate bonds, listed property, third party investment funds, hedge funds and structured products.
Sarasin says the alternative asset classes are used to provide diversity and may be used to protect and manage the returns in difficult periods, thereby limiting the downside.
Although the portfolio is, in some ways, similar to a hedge fund of funds, Sarasin says its distributor status makes it more tax efficient for UK investors than offshore funds of funds. Another difference is that under Ucits III, there can be no leverage, while hedge funds can gear portfolios.
The ability to short is also different – Ucits III funds can only short synthetically using derivatives or listed hedged hedge funds. This also contrasts with traditional Oeic funds that could only invest in derivatives for efficient portfolio management. In practice this meant fund managers could not buy and hold derivatives as investments in their own right.
However, while Ucits III funds such as Sarasin’s offering has the investment tools to get out of trouble in difficult markets, using them will be a new experience for fund managers compared with hedge fund managers that have been using them on a daily basis for years.