Pavilion Asset Management is making its first foray into the hedge fund market with the introduction of the multimanager fund of hedge funds.
The fund is aimed at high net worth investors who are looking for a medium risk fund. Listed on the Dublin stock exchange and domiciled in the Cayman Islands, the fund is an open-ended investment company.
Multimanager will be divided into two separate hedge funds. The first is the Pavilion target return fund, a fund of hedge funds that concentrates on arbitrage strategies. These are funds which identify markets which are going down and look to counterbalance these by investing in rising markets.
The second is the Pavilion growth fund, a fund of hedge funds that concentrates on long and short strategies. Long funds buy stocks in the hope that they will rise, so that the stocks can be sold for a profit when the price peaks. Shorts funds achieve the opposite by identifying falling stocks that can be bought cheaply when the price hits bottom.
The fund will be managed by Rob Nichol, who joined Pavilion in December 2000 from Aurum Funds.
Although hedge funds can be risky, they tend to be more stable than other types of funds more susceptible to market movements, because their strategies spread out the amount of risk.