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Matrix teams up with Lazard

Matrix Group has teamed up with Lazard Asset Management for its second Ucits III fund, the Matrix Lazard opportunities fund.

The fund aims for growth and income by investing in bonds, equities, convertibles and derivatives, using convertible arbitrage and special situations/event driven investment strategies.These will take advantage of situations where the Lazard team believes a security’s price differs from its expected value.

Convertible arbitrage involves taking long and synthetic short positions in the same company. For example, Lazard may invest  in convertible bonds that they believe to be inefficiently priced relative to the underlying stock. Returns would then be generated by any coupon payments from the convertible and the expected increase in the convertible’s value relative to the company’s underlying stock.

In the special situations/event driven strategy, Lazard will identify catalysts or corporate events that may affect the value of a company’s securities. It will then take a long or synthetic short position in a company’s securities depending on whether the event is likely to have a positive or negative impact on the price of that company’s securities

The Lazard team, headed by managing director and senior portfolio manager Sean Reynalds, will base the new fund on its existing Lazard Rathmore hedge fund. This was established in 2007, but the new fund will differ in that it cannot short securities directly. Instead, under the Ucits III rules, it can create short positions synthetically using derivatives.

Reynalds joined Lazard in 2007 and was previously a portfolio manager for convertible arbitrage strategies at SAC Capital Management. He has also worked for Sailfish Capital Partners, the Clinton Group, Deutsche Bank Securities, UBS Securities and Merrill Lynch.

In managing the new fund, Reynalds and his team will draw onLazard’s global investment resources of over 180 investment professionals including analysts and portfolio managers. Their experience of convertible arbitrage and special situations/event driven strategies may stand them in good stead, while the Ucits III structure should open up access for a wider range of investors.

However, Ucits III funds cannot do everything that hedge funds are able to, which could impact on performance. Administration costs could also be higher due to the increased regulation relative to hedge funds.

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