Robin McDonald and Marcus Brookes, who joins Cazenove’s multi-manager team as co-manager in the new year, did not invest in hedge funds in their previous positions at Gartmore.
McDonald says this will not make a difference to their management of Cazenove’s multi-manager diversity fund as both managers are familiar with the asset class and are able to call on the experience of other managers within the group.
The multi-manager diversity fund is classified as a cautious managed fund and aims to beat inflation by 4 per cent a year.
Cazenove says this target cannot be achieved through bonds and equities alone, as diversification through a broad range of asset classes is needed to achieve smoothed returns in all market conditions.
When selecting funds of hedge funds for the alternatives portion of the multi-manager diversity fund, McDonald and his team will take a similar approach to previous managers Mark Harries and Simon Wood. They will use hedge funds as a diversifier, investing only in funds of hedge funds that they consider low risk.
McDonald says hedge funds have been a positive differentiator that have driven performance and they will continue to provide diversification and downside protection under his stewardship.
He says: “We have four holdings in funds of hedge funds which give us exposure to 109 hedge funds. It is worth mentioning that just because we did not invest in hedge funds at Gartmore, Marcus and I are still aware of the asset class. Everyone in financial markets at the moment needs to be aware of hedge funds.
“We can gain great insight by going to Tim Russell, Neil Pegrum and Chris Rice. We have this pool of knowledge on tap and the calibre of hedge funds they run will provide a good source of information.”