Gartmore has added a seventh hedge fund to its AlphaGen range.
The AlphaGen volantis fund uses a long and short equity approach to UK smaller companies. It is managed jointly by Rob Giles and Gervais Williams. Giles has 15 years investment management experience, including seven years at Singer & Friedlander. He joined Gartmore in April this year as senior UK smaller companies investment manager. Williams, who heads up Gartmores UK smaller companies team, joined the company in 1993.
A team of four UK small caps specialists will research companies that have a market capitalisation of less than £1bn. They will attend around 1,000 meetings with smaller companies each year and will keep up to date with the news flow emerging from those companies.
Long and short equity is the most popular strategy for hedge funds and according to the CSFB Tremont hedge fund index, it is currently producing higher returns than some strategies.
During August 2002, long and short equity strategies delivered a return of 1.01 per cent according to the CSFB Tremont index, while convertible arbitrage, market neutral and event-driven strategies delivered between 0.27 and 0.6 per cent. However, other strategies such as fixed income arbitrage, emerging markets and managed futures delivered superior returns compared with long and short equity during the same period.
This product is aimed at traditional hedge fund investors and is riskier than funds of hedge funds which diversify across a portfolio of hedge funds. This risk is compounded by the funds narrow focus on UK smaller companies, which are regarded as higher-risk investments compared with larger companies. The fund also relies on a single strategy, which may not perform well in all market conditions.