Absolute Return Funds
Absolute Return Funds aim to deliver positive returns in all market conditions, with low volatility. They are structured to enable managers to introduce more sophisticated financial instruments such as derivatives into their portfolios and therefore protect against downside risk and to generate higher returns, rather than simply to reduce risk. Also they aim to beat cash returns and tend not to guarantee a minimum return.
Merrion manages the Merrion ActivateAlpha Absolute Return portfolio strategies using proprietary data analytics software which generates unique signals/graphics to identify changes in risk profiles for sectors and individual stocks. The strategy is market neutral using a combination of equally sized long and short equities baskets with approximately 15 stocks in each basket.
In order to achieve a selling/short exposure the strategy uses derivatives/CFDs to benefit from downward moves in equities’ values – note CFDs are used for both long and short baskets.
The strategy is designed to achieve positive returns irrespective of whether equities markets go up or down and is used as a risk diversification tool for clients who already have significant exposure to risk assets like listed equities, bonds, real estate and private equity.
Investors include family offices, corporates and high net worth individuals (HNWIs) who have experienced returns of 20% since ActivateAlpha’s launch in H1 2015. Performance in Q1 2016 was a positive 13% and highlights the value of diversifying risk in volatile markets where most equities funds/strategies globally experienced losses.
The High Alpha Fund is a process driven, global macro absolute return fund. Its targets are to deliver returns of at least 7% per annum. The fund has a proven track record going to back to 2007 and was the 2016 Winner of Best Global Macro Fund at the AI 2016 Hedge Fund Awards. Managed by Merrion Investment Managers, the same team who manage the Merrion Managed Fund, which is the Number 1 performing, global multi-asset fund in the Irish market over the past 20 years (Source: MoneyMate 31.03.2016) – the High Alpha Fund’s process-based performance adds value in active asset allocation and security selection. The team actively manage asset allocation between asset classes (including cash) to help preserve against capital loss and the fund uses options with the objective of preserving capital in the portfolio. Market leading absolute return funds, like the High Alpha, are an important consideration for investors, especially during volatile markets conditions. To find out more about this fund and Merrion Investment Managers please click here.
The Merrion Systematic Macro Portfolio
The Merrion Systematic Macro Portfolio is a quantitative and systematic, global macro absolute return strategy. It is managed by David Flynn (Formerly of Brevan Howard Macro). The strategy is designed to generate uncorrelated returns at both the asset class level and the peer group level. The Portfolio can invest in Equity Indices, Government Bonds, Currencies and Commodities. We use a broad set of leading fundamental and technical data (data that generates a statistical advantage at certain points in time). We aggregate this data in order to produce a quantitative score for each product in the portfolio. The model includes a wide array of data types which vary depending on the asset class. We implement a 7% portfolio volatility target in order to deliver superior risk-adjusted returns. We expect to deliver average annualised returns in the 10-12% range after factoring in fees, in all market conditions, for very low drawdown risk. Based on the European Securities and Markets Authority (ESMA) Risk Ratings, on a scale of 1 through 7, with 1 being the lowest risk and 7 being the highest risk, our strategy is classed as a 4.