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Liontrust launches European absolute return fund

Liontrust Asset Management has launched a UK-domiciled European absolute return fund managed by Gary West and James Inglis-Jones.

The fund uses the same investment process, the cashflow solution, as Liontrust’s Guernsey-registered European long/short fund which launched in December 2006 and is available for professional investors only.

The new fund will seek to make money for investors over the medium term in both rising and falling markets through the cashflow solution process which aims to exploit the opportunities created by the failure of company managers to forecast profits accurately.

The fund managers create a list of companies with strong cash flows likely to beat investors’ low profit expectations and companies with weak cash flows likely to disappoint on investors’ high profit expectations and then select the best long and short positions accordingly.

The fund will have 50 to 80 positions with a typical position ranging from 1 per cent to 5 per cent.

Each holding must have a capitalisation of at least £0.9bn at the time of investment.

The fund will have gross market exposure of 100 per cent to 200 per cent, volatility of around 8 per cent and the net of the fund will remain close to zero and kept within a range of + or -20 per cent.

Minimum investment is £1,000 with an initial fee of up to 5 per cent and an annual fee of 1.5 per cent.

There is a performance fee of 20 per cent on the outperformance of a cash hurdle (three month GBP Libor) on a high watermark basis.

Marketing director Rob Page says: “We believe the fund can be a core holding for investors as Gary and James have shown they can generate positive returns through a market cycle. This is a key requirement for many investors because they are generally still risk averse and continue to worry about future volatility in stock markets.”

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