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Moonraker avoids the herd

Fund of hedge funds manager Moonraker Fund Management says it looks at different ways to play investment themes rather than following the herd of institutional investors.

The company launched its commodities and global opportunities funds and year ago and these have produced positive returns of 19.3 and 1.7 per cent net of charges respectively during difficult market conditions. Their respective benchmarks produced negative returns of 41.2 and 21.2 per cent over the same period

Moonraker chief investment officer Jeremy Charlesworth attributes the funds’ performance to being positioned correctly for the downturn which turned out to be worse than the company had expected.

Moonraker’s preference for smaller funds meant it could benefit from trading in and out of markets while bigger funds were being hampered from doing this by their size.

Charlesworth positioned the funds to benefit from the global financial crisis through funds that were shorting financial and commodities. He also avoided corporate bonds in developed markets because he was concerned about the impact of rising fears about their creditworthiness and more fallout from the credit crunch.

He selected managers who had seen similar cycles in the commodities market and who had already sold their commodities portfolios short when many commodity investors were panicking and selling their holding. This enabled Moonraker to benefit from what was happening in the market.

Charlesworth is now positioning the funds for a stockmarket rally and is increasing exposure to managers who can trade long and short in equities, but who have a bullish view on the whole.

Charlesworth says: “We take a thematic approach. We think if an institutional player does something, we want to do the reverse. We think what would an institution do and what would be another way to play that theme. There are many ways to play a theme and we want to avoid the herd.”

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