The Ucits III Insynergy absolute China fund is scheduled for launch in mid-April.
Gam’s Michael Lai, the manager, will typically hold 15 to 70 positions in total. Of those, 15 to 60 stocks will be long and up to 20 short.
Insynergy says the fund gives Lai maximum investment flexibility, to identify and profit not only from those companies set to be the winners on China’s growth path, but its losers too.
“In giving Lai the power to synthetically short stocks, he has the tools to outperform across the market, to smooth some of the bumps along the way, and to deliver outstanding performance,” the asset managers say in a joint statement.
They expect to see volatility in the region and have therefore chosen a long-biased, long/short investment strategy for the new fund.
This decision is owing to their conviction that a long-only investment strategy, as adopted by many other funds, is inappropriate.
By being able to short stocks Lai may be able to increase predictability, the group says.
Lai will adopt an investment strategy similar to that one of the unregulated Gam greater China equity hedge fund.
This means he will identify top-down regional themes and overlay them with bottom-up company research and stock selection.
In order to preserve Lai’s alpha generating ability, both groups have agreed to limit the fund’s capacity to $250m (£162.42m)