NASSAU, Bahamas (HedgeWorld.com)– Magnum Fund Management’s latest fund touts low volatility and aspires to offer double-digit returns with low correlation to any asset class.
The US$250 million firm is partnering with Jericho State Fund Consulting LLC to offer the MG Collateralized Debt Fund, which invests in mezzanine debt secured by a diversified portfolio of hard assets located in various geographic regions.
Jericho has negotiated these types of loans for 34 years and has participated in hundreds of transactions totaling more than US$1 billion, officials said. According to a news release, the notes within the hedge fund will be backed by a sufficient loan-to-value ratio to cover even a significant decline in real-estate prices, and they have shown impressive returns with low volatility.
The historical low rate of defaults on loans negotiated by Jericho will help the fund to offer low volatility to investors, according to David Friedland, president of Magnum U.S. Investments Inc. The loans the fund will purchase will yield an average annual return of about 18% a year, with steady income generation coming from those bonds.
With both a domestic and offshore versions, the MG Collateralized Debt Fund will launch on Jan. 1 with roughly US$5 million. The investment minimum for the fund has been set at US$100,000.
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