H2O Asset Management launches Fidelio a long –short absolute return equity fund

H2O announced the launch of Fidelio, a long–short equity fund which aims to generate an absolute return of 5% p.a. over a recommended 3‐year investment horizon. The funds objective is to keep volatility below that of global equity markets within this timeframe. It will also seek to exhibit a low correlation to the major global equity market indices.

H2O announced the launch of Fidelio, a long–short equity fund which aims to generate an absolute return of 5% p.a. over a recommended 3‐year investment horizon. The funds objective is to keep volatility below that of global equity markets within this timeframe. It will also seek to exhibit a low correlation to the major global equity market indices. To this end, the fund will take both long and short positions, mainly on economic sectors and listed companies.

Against a market backdrop characterized by low interest rates, excessive regulation and mechanized investment strategies, the dispersion of risk premiums across equity markets has reached unprecedented levels, thereby offering many unique arbitrage opportunities for active relative‐value managers. H2O Fidelio aims to tap value out of this distinctive environment.

First, the fund benefits from the long‐standing global macro expertise of the H2O management team. This “top‐down” component is critical to seize the shifts in paradigm, the swings in market fashions and the correlation rotations that impact the equity asset class as a whole. It enables the team to focus solely on those strategies that are relevant to the on‐going environment.

H2O Fidelio also relies on a “bottom‐up” process managed by Gonzague Legoff who has been running global macro funds since 2003. In line with H2O’s style, it is a global, judgmental, opportunistic and unconstrained style that is based upon a set of convictions and a search for diversification.

H2O Fidelio may for instance draw value from the inefficiencies inherent to today’s equity markets. According to Gonzague Legoff and Christophe Chappuis, the fund’s co‐managers, “Investors’ constraints generate the best sources of performance. As most asset management companies organize their equity research & management teams along geographical lines, they breed regional arbitrage opportunities between stocks belonging to the same sectors and exposed to the same markets.”

The positive side of this multi‐strategies approach is that it does not necessitate the comprehensive and systematic coverage of an excessively large security investment universe by means of a crowd of equity analysts. It requires the opportunistic singling out of a few specific themes and their blending with the strategic positions.

Since its inception on October 25, 2016, the USD‐denominated I share class of H2O Fidelio has delivered a +3.9% positive return as at February 13, 2017 [1].

Next Finance , March 2

Footnotes

[1] Source H20 Asset Management, 13.02.2017.  Figure is net of fees.

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