OPM to launch two multi-manager funds next year

OPM Fund Management is launching global and absolute return multi-manager vehicles early next year, based on existing products run for internal clients.

The EFA OPM Diversified Target Return multi-asset fund will aim to deliver 3% above the base rate over a market cycle.

Capital preservation will be a major consideration for the absolute return product, says CIO Tony Yousefian.

He will invest in long-only absolute return funds, direct equities, ETFs, near cash instruments and deposits, as well as using portfolio hedging and limited borrowing.

The fund's core of about 70% will be global, long-only absolute return funds. Satellite allocations will include some direct investing, and structured products on equities, physical commodities and currencies.

At present the portfolio on which Diversified Target Return is based has 22% in commodity-related products, 5% in a structured product and 71% across seven funds including Gartmore's European and UK Absolute Return funds, LGIM's UK Alpha and Threadneedle Absolute Return Bond.

The EFA OPM Worldwide Opportunities fund will be a more aggressive growth fund which can deviate widely from its FTSE All-World benchmark.

Yousefian will be able to invest in funds, direct equities and ETFs.

The internal portfolio has 21% in equities including investment trusts, 15% in sterling and 63% in 10 funds including Artemis European Growth, Lazard EMs, Investec EM Debt, Martin Currie Asia Pacific and Legg Mason US Equity.

Yousefian will have leeway to deviate significantly from the FTSE All World benchmark, and is likely to hold few managers per asset class.

Most returns should come from OPM's asset allocation, with manager selection adding alpha, he said. He will use ETFs sparingly, because he believes in the long term they do not provide alpha.

The funds will have an annual charge of 1.5%.