Threadneedle is preparing to launch a UK Absolute Alpha fund for Chris Kinder and Mark Westwood, and plans to close its UK Crescendo hedge fund.
The new fund will be structured as Ucits III and will use a similar investment process to the £16m Cayman-domiciled UK Crescendo hedge fund, which will see its assets merged into the new fund. It will launch in the third quarter.
This latest portfolio is being launched in response to client demand, the group says.
It will sit alongside Threadneedle’s six-strong absolute return range, which includes the American Absolute Alpha, Absolute Return Bond and Target Return funds, and has £1.9bn in assets under management.
Westwood says: “This is an exciting time to leverage our expertise in delivering absolute returns for our clients.
“With the dislocations of the past few years still fresh in investors’ minds, the opportunity to add value through fundamental and valuation analysis on a long/short basis remain considerable.
“This fund enables a broader range of investors to access uncorrelated returns through the cycle.”
The managers will use a bottom-up stockpicking style that combines contrarian, value, and momentum investing, says Kinder. They will aim to identify out-of-favour stocks with potential the market has failed to recognise.
On the short side, the managers will look for highly fashionable shares and those where there is underlying weakness unnoticed by the market.
“We are broadly positive on equity markets, where we think valuations are attractive, and we are not in the double-dip camp,” Kinder adds.
“We are positive on global growth. However, we are more cautious on retailers and areas exposed to Government spending.”
The closure of the Crescendo hedge fund, planned for October, is part of the group’s broader project to refine and update its absolute return range.
Gary Collins, the head of UK wholesale, says the group has the resources to move to the next stage of development for absolute return funds. “We have spoken extensively to our clients and they have indicated a great appetite for a product that will capitalise on the UK investment market in this form.
“The introduction of Ucits III regulation has triggered strong growth in the regulated absolute return sector and the migration of hedge fund strategies to the transparent, liquid and highly regulated Ucits market looks likely to continue to drive investor interest.”
The new fund’s retail share class will attract an initial charge of 3.75% and an annual management fee of 1.5%, with a 20% performance fee.
