JERSEY, Channel Islands (HedgeWorld.com)–Liberty Ermitage Group has launched a new bond fund that combines the returns of two segregated portfolios, one that invests in short duration government and high-grade corporate debt and another that invests in those securities plus low volatility bond and bond substitute hedge funds.
The new fund, Liberty Ermitage Liquid Assets Fund, started with initial assets of US$20 million, according to a statement from Liberty Ermitage Group.
Company officials said the Liquid Assets Fund is Liberty Ermitage’s response to client demand for a cash-plus product, something with liquidity, limited credit risk and low volatility but that at the same time offers higher returns than today’s low interest rates can provide.
The Liquid Assets Fund will consist of two “segregated portfolios” called L1 and L2. Each will be offered in dollar, euro, pound sterling and Swedish krona currency shares.
L1 will contain actively managed investments in short-duration government and high-grade corporate debt. Its long-term return objective will be in the neighborhood of Libor plus 50 basis points.
L2 investments will comprise a blend of 75% L1 investments and 25% low volatility bond- and bond substitute-style hedge funds. Its long-term return objective will be Libor plus 350 basis points, according to the Liberty Ermitage statement.
L1 will charge an annual management fee of 0.5% and no performance fee, while the L2 part of the fund will charge an annual management fee of 1% and a performance fee of 15% of the increase of the net asset value above a benchmark.
Liberty Ermitage Chief Investment Officer Ian Cadby said the new fund fills a gap in the firm’s product offerings for institutional investors, hedge fund managers and commodity trading advisers looking to enhance cash returns.
“In this low interest rate environment we expect these funds to have wide appeal and target investors will also include private client asset managers and intermediaries including law and accounting firms and trust companies,” Mr. Cadby said.
Liberty Ermitage Management (Bermuda) will manage the Cayman-domiciled segregated portfolio company, while Liberty Ermitage Asset Management Jersey Ltd. will act as the adviser.
Liberty Ermitage Group has US$3 billion in assets under management, including US$1.4 billion in hedge fund strategies. The firm is part of Standard Bank Group, Johannesburg, South Africa. Liberty Ermitage also recently launched a new fund of funds that uses higher leverage to boost returns http://www.hedgeworld.com/news/read_news.cgi?section=intl&story=intl10628.html.