RWC Partners opens Pilgrim hedge fund to retail market

RWC Partners is converting its UK hedge fund Pilgrim into a UCITS product to compete with the likes of BlackRock’s UK Absolute Alpha fund in the retail market.

On 28 October the fund will redomicile from the Cayman Islands to Luxembourg and become a sub-fund under the group’s SICAV umbrella. It will sit alongside two equity income products run by Nick Purves and Ian Lance and the long/short Europe Absolute Alpha fund, managed by Ajay Gambhir.

The Pilgrim fund has been run by John Innes, head of UK equities, who makes directional bets on the market through his long and short positions. Net market exposure ranges from +20% to +80% and gross exposure ranges from 100% to 200%.

Dan Mannix, head of business development at RWC, said the fund will be fully regulated under UCITS and more accessible to UK investors.

“Given the clarity around the ability to short that now exists in the industry, the confidence we have in the tax efficiency of the UCITS structure and the fund’s liquidity, the UCITS III structure is more efficient for us and can be used by a broader range of investors.”

It is not yet decided if the fund will sit in the IMA Specialist or Absolute Return sector, as Mannix said the fund has a vast range of natural competitors including Mark Lyttleton’s BlackRock UK Absolute Alpha, RWC’s own European long/short fund, and traditional long-only UK equity funds.

“Part of the concept of an absolute return fund is to simply try and generate a positive return through taking short and long positions, but the manager of the Pilgrim fund will take more market directional positions. This is the perfect vehicle for investors who want directionality with lower volatility,” said Mannix.

The Pilgrim fund has returned 2.5% over the year to 30 September compared to the FTSE All Share loss of 4.4%, Morningstar figures show. Since launch on 27 October 2000, the return leaps to 99% compared to the All Share’s 24%.

After the conversion the fund will be renamed the RWC UK Pilgrim fund and will have £22m in AUM.