Thames River Capital has established the Thames River Topaz fund, a hedge fund that will invest in global emerging markets, including Russia, China and Mexico.
The fund is structured as an Oeic and aims to produce capital growth by using a long and short equity strategy. Thames River Capital believes the volatility and inefficiencies within global emerging markets provide ideal investment opportunities for hedge funds.
Ed Morse, director of sales at Thames River Capital, says emerging markets tend to be dominated by domestic investors who tend not to see opportunities from a global context. Consequently, Morse believes they miss out on opportunities that are more obvious to international investors. These markets are also poorly researched, with fund managers taking a long time to respond to the news that comes out company reports and announcements.
A team of emerging markets specialists headed by Rory Landman will manage the fund. Landman, who has over 12 years' experience of investing in emerging markets, joined Thames River Capital in September 2000. He was previously head of global emerging markets at Baring Asset Management and has also worked for Invesco.
Although the Topaz fund can go long and short, it will not be involved in aggressive short selling. Instead, it will have a bias towards long positions. It can also be geared up to 150 per cent on the long side and 50 per cent on the long side, but in practice, it is unlikely to do so.
The fund is likely to be of interest only to institutional investors such as pension funds and high-net-worth investors. However, even those types of investors may be wary of investing in an emerging markets hedge fund because of the high risks involved and the difficulties in predicting the behaviour of stocks in these regions.