Recent News

City Financial launches Asian Fund of Funds advised by Clontarf Capital

• Portfolio managed by alternative asset specialists, Clontarf Capital
• Fund has attractive performance fee structure
• Fee only applies once 10 per cent has been made, with no catch up
• Fund is one of relatively few to offer hedged exposure to Asian growth
• Asian expertise drawn from local fund manager talent

City Financial, the UK asset management firm, announced today the launch of the City Financial Asian Absolute Growth Fund, its first foray into the Asian Fund of Funds market and its first fund primarily targeted at institutional investors.

Capitalising on the strong maturation of the Asian Hedge fund market in recent years, the fund is designed for investors seeking hedged exposure to Asian markets, with low fees and a high degree of transparency. In contrast to many of its peers, the performance fee only applies once 10 per cent performance has been delivered, with no catch up. This, coupled with a management fee of only 80 basis points, puts the fund in an exclusive group aimed at offering high returns without characteristic high costs.

The City Financial Asian Absolute Growth Fund offers a concentrated portfolio of 10 high-conviction funds with exposure to growth in China, India and other Asian markets. These funds are meticulously selected by Aoifinn Devitt and the Clontarf team from a field of over 1000 and evaluated for transparency, track record and returns, complimented by personal meetings with a team that spends one month in three in Asia.

“Not long ago, the Asian hedge fund market was considered ‘the wild east,’ but this is simply no longer the case” said Andrew Williams, Chief Executive of City Financial. “We are delighted to be launching the City Financial Asian Absolute Growth Fund to offer select exposure to the considerable on-the-ground fund management talent that the region is beginning to boast. We’re also delighted to have Aoifinn Devitt and Clontarf join our roster of exceptional portfolio managers.”

Aoifinn Devitt, Portfolio Manager of the fund, said: “Institutions have for years been investing in the Asian region but most still limit their exposure to long-only holdings. We are extremely proud to be able to offer a product that has evolved to meet their demands, not only featuring meticulous selection standards and complete transparency, but also an ‘evolved’ fee structure that puts us head and shoulders above our peers.”

City Financial is a London-based asset management group that has deliberately designed a nimble company to bring to advisers and investors a straightforward series of funds managed by individuals who we believe are masters of their craft. Andrew Williams is the Chief Executive and Robert C Hain is the Chairman.

Clontarf Capital provides institutional investors with multi-manager solutions, manager selection assistance and strategic allocation services in hedge fund investments and other alternatives. It was founded by Aoifinn Devitt in 2006. Clontarf Capital is a trading name of Alternatives St. James, which is authorized and regulated by the Financial Services Authority.

THIS PAGE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT AN OFFER OR SOLICITATION WITH RESPECT TO THE PURCHASE OR SALE OF ANY SECURITY. THIS SUMMARY MAY NOT BE REPRODUCED OR REDISTRIBUTED AND IS NOT INTENDED TO CONSTITUTE LEGAL, TAX, OR ACCOUNTING ADVICE OR INVESTMENT RECOMMENDATIONS. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN ADVISORS ABOUT SUCH MATTERS.

Any investment decision with respect to an investment in a hedge fund or a fund of hedge funds should be made based upon the information contained in the Confidential Private Placement Memorandum of that fund. The information contained herein is not intended to be complete or final and is qualified in its entirety by the offering memorandum and governing document for each fund.

We do not represent that this information is accurate or complete and it should not be relied upon as such. Opinions expressed herein are subject to change without notice. The products mentioned may not be eligible for sale in some countries, nor suitable for all types of investors.

Private Placement of this proposed fund is subject to country specific private placement rules. For certain countries such as France, Italy (and certain other jurisdictions) private placement cannot be undertaken and placement of shares will only be possible upon registration of the products in those jurisdictions.

Universal sentiment in markets is very often wrong. Whilst many investors are underweight in gilts, we believe there is a plausible case for owning this asset class in 2010.

Yesterday’s announcement of 0.1% positive quarter-on-quarter growth, after six quarters of contraction, speaks to the fragile nature of the UK economic recovery. We believe the key to positive gilt demand in 2010 will be weak economic performance.

When quantitative easing began in March of last year the consensus view was that it would cause a bull run in the gilt market – this did not happen. The positioning of the Fund with this in mind was a primary factor in generating the positive performance of the City Financial Strategic Gilt Fund in 2009, the only such positive return amongst its peers last year[1].

Rather than a surge in gilts, 2009 was characterised by a long and sustained rally in the equities markets. While this may have been simply coincidental to quantitative easing, it suggests that we should consider the possibility that a withdrawal of quantitative easing will have an equal, but opposite, effect. We could therefore see a retracement in equities and a much more stable gilt market than is currently built into most forecasts.

Regardless of who crosses the threshold of number 11 next, serious fiscal tightening is all but certain. The withdrawal of government spending on this scale will imperil the economic recovery that today’s announcement suggests is rather fragile. As a policymaker, how do you tighten fiscal policy and terminate quantitative easing without falling into a double-dip recession?

The FSA is also expected to increase the amount of highly rated liquid assets that deposit-taking banks must keep on their balance sheets – this could fund a significant proportion of this year’s government borrowing requirement.

Whilst quantitative easing has bolstered the narrow measure of the money supply, this massive injection of liquidity has had no effect at all on the wider measures of money supply. The real economy will not feel the benefits until the banks begin to on lend the money currently on deposit with the Bank of England. This is why we would not rule out a further easing in monetary policy either through a cut in interest rates, possibly to Swedish-style negative interest rates, or through further quantitative easing. These measures could help to offset fiscal tightening.

Investors will need to weigh these factors to achieve the proper balance between equities and fixed interest within their portfolios.

[1] Source: Lipper, 31.12.2008 – 31.12.2009. Note: IMA UK Git Sector.