Odey Asset Management has raised 25m from investors for its first retail fund launch, UK Absolute Return.
The Ucits III fund was brought to market on May 12 allowing retail investors to access the hedge fund strategy used by Crispin Odey. Although Odey will not be lead manager on the fund, he will assist James Hanbury, recruited from ZA Capital at the end of last year.
When fully invested the fund will consist of 40-50 best ideas with a maximum gross exposure of 150%. The firm describes the fund portfolio as primarily long equities with opportunistic and limited short positions, government bonds, cash and commodities exposure.
Hanbury is looking for companies that are market leaders, have earnings visibility, balance sheet strength or have low valuations after a reorganisation. Possible stock picks for the portfolio include Travis Perkins and Sports Direct.
He will draw upon the ideas of 15 analysts researching macro themes and seven strategists, including Odey, the founder, will look at possible investment scenarios at a geopolitical, country, currency and sector level.
It aims to outperform the FTSE All-Share over the
economic cycle. Minimum investment is 5,000, there is an annual fee of 1.25% and a performance fee of 20% is applicable to any absolute return with a high water mark.
Meera Patel, a senior analyst at Hargreaves Lansdown, says the fund will not be included in the Wealth 150 as her firm wants to see how the new manager performs. She is also not keen on funds with a performance fee. We can argue that any active fund manager should be able to deliver positive returns in the longer term, so performance fees can make these types of funds expensive, she says.