Bestinvest says
Neil Pegrum, the co-manager of the fund, left Cazenove in April 2010 and has been replaced by John Warren. This fund is modelled on the Cayman Islands based hedge fund that Paul Marriage has been successfully co-managing since 2005. The fund is managed aggressively. The largest threat to this strategy would be a prolonged period of significant small cap underperformance. Investors should be aware that Absolute Return funds do not guarantee a positive return and you could get back less than you invested, as with any other investment. Additionally, the underlying assets of these funds generally use complex hedging techniques through the use of derivative products, which can carry additional risks which may not be immediately apparent.
The fund aims to achieve positive absolute returns of 10% net of fees and will not be managed against any UK equity index. To achieve this it will make full use of the UCITs III regulations, investing not only in UK equities but also in derivatives (futures & Contracts for difference (CFDs)). Additionally up to 100% of the portfolio may be in held in cash and near cash. Principally the derivatives provide both long and synthetic short positions meaning that the manager has the potential to make money not only from stocks that rise in value but also from falling stocks. Long positions will be held for a period of several years while short positions are actively traded with an average holding period of four to five months. The investment process is purely bottom up and the manager believes that this strategy is equally suitable in all economic and market environments. Quantitative tools do not drive the investment decisions and the stock selection is based solely on qualitative fundamental analysis that is conducted internally. Key characteristics that the manager looks for are a differentiated product, with the ability to grow the margin and generate cash. Each stock held will have a valuation target. The fund is not constrained by sector or industry limits.