The new fund will broadly follow the same strategy as the Paulson International Limited fund with a minimum overlap of 85%. That fund launched in 1996, has AUM of $1.7bn and has produced annualised net returns of over 12%.
John Paulson is considered as a pioneer of the merger arbitrage strategy and already runs around $7.6bn of client money. The basis of the strategy is generating profit through combinations of long and short trades on companies involved in M&A situations.
The fund will target an annualised return of 8-10% net of fees, with expected volatility of 6-8% and will be benchmark unconstrained. It will invest globally in equities, equity related and debt securities with a focus on high quality, larger spread deals. The fund will particularly target takeovers where there is higher probability of rival bids or a unique deal structure.
“We are very pleased to be partnering with Schroders and look forward to being able to offer our merger arbitrage capabilities to a wider audience via the strength of the Schroder GAIA distribution network, ” Paulson said.
Schroders’ GAIA platform was launched in November 2009 and now has total AUM of $5.6bn. It offers investors UCITS compliant access to alternative investment strategies with moderate to low correlation to mainstream markets.
