RICHMOND, Va. (HedgeWorld.com)–TFS Capital LLC’s long/short equity strategy has worked so well within the firm’s multi-strategy opportunistic funds that TFS’s principals decided to break it out into a separate fund.
The firm launched the Huntrise Market Neutral LLC fund Jan. 2 with about US$4 million in seed money provided by TFS. Casey Cline, director of marketing and client relations for TFS, said ultimately the fund could grow to US$250 million. The fund is in its initial subscription phase. The minimum investment is US$1 million.
The fund is targeting primarily funds of funds investors initially, Mr. Cline said.
The Huntrise Market Neutral fund will invest mainly in small-cap and midcap stocks, because the firm’s quantitative models are well suited to finding inefficiencies in that space, said Kevin J. Gates, one of three TFS principals/portfolio managers.
“It’s our belief that the small and midcap markets are less efficient and less liquid and there is less information on the companies,” Mr. Gates said. “There are fewer people tracking and trading.”
The performance objective is to generate leveraged returns of between 15% and 20% a year with a Sharpe ratio of “better than 1.5,” Mr. Gates said. Simulated results generated a Sharpe ratio of 1.98, he said.
Investors will pay a management fee of 1% and an additional 20% on performance above a high watermark. There is no lock-up period and investments, and redemptions can be made monthly.
Bear, Stearns Securities Corp., New York, is the prime broker and custodian for the fund; J.H. Cohn LLP, Roseland, N.J., is the administrator; and McGladrey & Pullen LLP, Bloomington, Minn., is the auditor.
TFS Capital currently manages about US$100 million in assets in two onshore funds, Huntrise Capital Partners LLC and Huntrise Capital Leveraged Partners LLC, and one offshore fund for which it serves as the portfolio manager, Huntrise Global Partners Ltd.