Marshall Wace launched its Global Financials Aggressive Fund in late June, and at this point, it looks on track to accomplish target annual returns of 30-50% -- it was up 10% gross as of late last week.
The fund complements the Marshall Wace Global Financials Fund, a market-neutral, geographically diversified fund, which has an 11-month track record and a gross return of 21% on 6-7% volatility. The funds manage $220 million between them.
The new fund is a 'best ideas' fund that looks exclusively at banks and financial institutions. It is more concentrated than its market-neutral brother, with 20-25 positions as against the market-neutral fund, which has 50-60 positions and lower volatility.
"The first fund appeals to pension funds and insurance companies," says Hong Kong-based portfolio manager Amit Rajpal. "The Global Financials Aggressive fund, though, has more high-net-worth individuals and funds of hedge funds, which crave returns and don't mind so much about daily volatility, although they are on the phone frequently for news and updates."
The new fund targets investors who have a higher risk tolerance. The Aggressive Fund has no geographic boundaries and could be 100% invested in one place, as opposed to the market-neutral fund, which is split equally between Asia, Europe and the Americas.
Net exposure is highly variable for the new fund, but it ranges usually between -20% and + 50%. The gross exposure is 200-250%.
The Global Financials Aggressive Fund seeks to capture profit from alpha, beta and leverage, whereas the Global Financials fund just searches for alpha, due to its market neutrality.
The prime broker is Morgan Stanley and the fund administrator is Citi.