GNI Fund Management, a subsidiary of Old Mutual, has followed up its two GNI global strategies funds with GNI global strategies, a capital guaranteed offshore fund that invests in hedge fund strategies and futures.
The fund is structured as an Oeic and aims to produce a target return of 14 per cent a year over its seven-year term. It will diversify across four alternative investment strategies run by different fund managers. Equity arbitrage is managed by Merrill Lynch Investment Managers and will mainly exploit anomalies in share prices when the composition of stockmarkets change. The long and short European equities strategy is managed by Thames River Capital on a bottom-up basis. The long and short Government bond strategy is managed by a company called Sinopia. Winton is the company responsible for the futures programme, which uses a computer-based trading system to trade around 100 futures.
The mixture of strategies from different management groups means that investors are not relying on a single strategy to work well at all times, neither are they reliant upon one fund manager. In addition, the capital guarantee may provide some security in such a highly speculative area where losses could be heavy.
However, there is no guarantee that the fund will meet its target return each year, so investors expecting high returns in exchange for the high risks they are taking could end up with only their original capital after seven years.