This fund targets a net return of 10% per annum in all market conditions and is modelled on the Cayman Islands based hedge fund that Neil Pegrum and Paul Marriage have been successfully managing since 2005. The fund is managed aggressively and takes 'short' positions in stocks the manager expects to fall in value as well as 'long' positions in stocks that appear undervalued. Note the gross exposure (leverage) of the fund can be up to 300%, but the normal range is likely to be between 100 - 200%.
The fund will make full use of the UCITS III regulations, investing not only in UK equities but also in derivatives (futures & CFDs). Additionally up to 100% of the portfolio may be in held in cash and near cash. The manager follows a pragmatic investment style and will initially consider the macro environment that he is investing in. However, the key strategy is a bottom up approach in identifying under and overvalued stocks with an investment angle. Each stock held will have a valuation target. The fund is not constrained by sector or industry limits.
A portfolio is likely to hold some 30-60 positions, generally focused on small and mid-cap stocks. Typically the fund will have net exposure of 75%. The fund will use CFDs, Equities and FTSE futures. Shorts are done through CFDs. Individual stock positions will be no more than 7.5% of NAV.
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