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Octopus sets £500m target for absolute fund

Octopus is aiming to attract £500m over the next three to four years for its new alternative strategies fund.

The absolute return fund of funds was soft-launched in September and aims for an annual return of cash (Libor three- month) plus 2.5 per cent net of fees. It comprises 16 different holdings spread across four strategies – short/long equities, short/ long bonds, multi-asset and specialist, such as life settlements and property. It also has hedging ability. It is managed by Colin Lunnon and Bish Lumbu. Annual charge is 1.75 per cent.

Director of investment business Karl Jentoft says: “People want more absolute return funds and this has a lower volatility ratio which should be less correlated to some other asset classes.”

Leading Edge Adviser Forum chairman Ben Stevens says: “It will appeal to IFAs that do not benefit from fund discounts as it accesses a number of funds that would be more expensive if bought direct. It will also appeal to the institutional market which may want to outsource the investment management. It is targeting 8-10 per cent net a year, which is achievable as long as it holds income-yielding assets such as property and life settlements but the question is how inflation-proof is the fund?”

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