Old Mutual aims to give investors peace of mind

There are currently three ways of satisfying demand for absolute return products, expected to increase in 2006, says Simon Wilson, head of marketing at Old Mutual Asset Managers, a specialist boutique backed by FTSE 100 company Old Mutual plc. These solutions are structured products, hedge funds and multi-assets funds.

The London house, with hedge funds accounting for a quarter of its $8.3bn (?6.3bn) in managed assets, first diversified into structured products last April, launching its Prosper 80 bond, targeting cash + 4 per cent per annum, with a protected price of 80 per cent of the highest ever fund price. The aim is to deliver “peace of mind” to nervous investors, despite recent strong equity performance.

The fund, launched with $40m seed capital and opened to general subscription in September, has since grown to $100m. It uses a range of managed accounts diversified by strategy, line manager, asset class and style. “The difference with multi-manager is that we are not handing the money out to external companies,” says Mr Wilson.

“We keep the assets here, and external managers advise on how they are managed. The advantage is that we get full transparency of the underlying

portfolio.”

Old Mutual’s multi-strategy hedge fund is based on the same concept, a core product to be pushed into Europe during 2006, through a series of “very

strong relationships with specific partners,” yet to be established.

Another key product, “ideally structured for the European market” says Mr Wilson, is the Dublin-based Old Mutual Global dynamic fund, launched 18 months ago. This invests across five asset classes: equities, bonds and cash, plus hedge funds and property, which represent 43 and 12 per cent of assets respectively.

“A lot of people perceive hedge funds to be high risk, but that is just not the case a lot of the times. You get a wide disparity of returns and risk-returns profiles, but much of the attention is concentrated with the high profile hedge funds that possibly haven't done so well,” says Mr Wilson.

ET

Wilson: keeping the money internal gives us full transparency