The Old Mutual UK Dynamic Equity is a UCITS 3 version of Luke Kerr’s existing offshore hedge fund. The fund targets capital appreciation from both long and short positions in stocks outside the FTSE 100 index, but investors should note that this is not an absolute return fund and is benchmarked against the FTSE 250. The stock selection process mirrors the hedge fund and involves searching for ‘long’ companies with 1) potential for sustained above average growth, 2) Potential for profit upgrades, 3) Potential for a re-rating. Suitable stocks to ‘short’ offer the reverse of these characteristics. It is intended that 60 - 100% of portfolio will be invested in longs (35-40 holdings), and 0-30% of portfolio invested in shorts (0-40 holdings). Net exposure will vary from 30-100%, with gross exposure varying from 60-130%. Kerr uses technical analysis to assist in his market timing. Capacity will be limited and reviewed at £150m.
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