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This new fund currently has assets under management of $46 million, rising this month to $78 million, and has an estimated capacity of $500 million. Despite the May turmoil in emerging markets it recorded a positive return estimated at 0.3%.
Finisterre is targeting fundraising from hedge funds and family offices, then moving onward to private banks.
The fundÆs characteristics are somewhat akin to an emerging-markets macro fund. The bulk of the fundÆs focus will be placed on Latin America, central and Eastern Europe and Africa. Asian exposure, especially special situations scenarios, will constitute a smaller component of the fund. These features therefore combine to make this fund potentially interesting for investors in Asia who are looking to diversify their emerging-markets exposure and find alpha beyond the confines of this region.
In terms of the asset-class composition, hard equity limits are 30%, although the fund expects the day-to-day mix to be approximately 40% local market, 30% credit, 20% special situations and 10% equity. The minimum initial investment in the fund is $500,000.
The exposure approximations for the Global Opportunity Fund will be in the vicinity of 20% net long to 15% net short. The volatility of the fund is envisaged to be 6-8% and targeted returns are 15% plus.
ôThis hedge fund is more focused in its country view and more lateral in its expression of risk than most funds involved in emerging markets,ÆÆ says Tom Priday, CEO and founder partner of Finisterre Capital. ôItÆs a fund for those who want a more sophisticated and active approach to exposure to global emerging markets. Recent risk-reduction pressures have caused volatility that requires a hands-on style from managers who are comfortable being net short.ö
Priday points out that the main concern for investors today, especially in emerging markets, is the fear of a global slowdown and gapping up of interest rates. He believes commodity prices will stay strong, particularly oil and that non-oil producing countries running deficits may be vulnerable.
Fees for the Global Opportunity fund are 2% and 20% with a high-water mark. The prime brokers are Credit Suisse and Goldman Sachs. The fundÆs administrator is GlobeOp Financial Services and the auditors are Price Waterhouse Coopers. The fundÆs US lawyers are Seward and Kissel and UK lawyers are Iliad Consulting.
In addition to the new Global Opportunity Fund, Finisterre operates the $226 million Sovereign Debt Fund, a fund with 2.6% volatility that has produced annual returns of 9%. It also manages the Local Market Fund, a $45 million fund that concentrates on trading foreign currencies and interest rates.
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.
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SGX’s new framework for Spacs will likely provide investors with a much-needed channel for direct deals, but the verdict is still out on whether it will bring liquidity to the bourse.