Hedge funds help Old Mutual multi asset fund to generate strong returns

The Old Mutual Global Dynamic Fund, a multi asset absolute return fund managed by Old Mutual Asset Managers (UK), is comfortably ahead of both its performance target and peer group average since launch in August 2004, helped by strong returns from its hedge fund holdings.

The US $154 million fund, which actively allocates across equities, bonds, hedge funds, property and cash, has returned 31.6%, compared with a Standard & Poor’s Asset Allocation Global Flexible sector median of 23.2%. This is equivalent to an annualised return of 14.6%, achieved with annualised volatility of 6.7%. (Source: Standard & Poor’s, bid to bid, net income reinvested, UK sterling, 23/8/04 – 31/10/06)

The Old Mutual Global Dynamic Fund is a fund of funds and has been managed since launch by asset allocation specialist Tracey Lander. Primarily invested across OMAM’s range of in-house funds, the fund also allocates to external funds and managers where appropriate. As a result, the fund is highly diversified, giving exposure to a range of specialist funds and managers covering five asset classes, and aims to generate capital appreciation through all market cycles. It has a flexible investment remit and may hold up to 60% of its assets in hedge funds.

Manager of the Old Mutual Global Dynamic Fund, Tracey Lander, comments: “Hedge funds, and in particular market neutral funds, are the best asset class in terms of matching the performance objective of the fund. They have a low correlation with other asset class returns, meaning that they offer significant diversification benefits, and we therefore tend to maintain a high strategic weighting. Currently we’re also overweight property, which continues to generate stable returns with low volatility. Against this we’re neutrally weighted in equities, with an underweight in the US being offset by an overweight in UK smaller companies, and underweight bonds.”

OMAM’s Director of UK Sales, Matthew Nagele, adds: “The Old Mutual Global Dynamic Fund has a flexible investment remit and management style, meaning that it can invest in those assets which are best able to achieve absolute return across a range of market conditions. Investors are placing increasing importance on wealth preservation and as a result there is growing demand for absolute return products such as this. This is a trend which we expect to continue for the foreseeable future.”

The Old Mutual Global Dynamic Fund is a professional investor scheme domiciled in Ireland and listed on the Irish Stock Exchange. It has an annual management charge of 0.75% and a performance fee of 10% on new highs above cash plus 6% per annum. The fund has sterling, euro and dollar share classes, with the minimum investment being €125,000 (or the equivalent in sterling or dollars) and has weekly liquidity.