The fund is structured as a UK Oeic and is authorised as a Non-Ucits Retail Scheme. The base currency is sterling. The fund uses a quantitative approach, investing in the Citi Carry & Value index. The index invests in six underlying indices in both developing and emerging market currencies. It aims to exploit market anomalies between higher and lower yielding currencies, and also to pick up under or over-valuation in currencies based on macroeconomic factors.
The fund will be managed by new hire Derek Taylor. He is a currency specialist and has previously worked at Lehman Brothers and Midland Bank Treasury, amassing over 35 years of experience.
The group said the fund is designed to provide diversification to other asset classes, aiming for an above-cash return. The ‘A’ clean share classes will have an AMC of 0.8% and minimum investment of £25,000, while the ‘B’ share class will have an AMC of 0.65% and a minimum investment of £250,000. The group is also offering discounted terms for the offer period of 1 October to 18 October, which reduces the AMC by 0.15% for the ‘A’ Share class and 0.2% for the ‘B’ share class.
Chris Finch, managing director at the group dismissed the notion that currency markets are full of speculators. He said: "The majority who play in this space are simply looking to hedge FX liabilities in one form or another. This provides us with a significant opportunity to actively invest in currency with a view to delivering capital returns."
The new fund will be targeted at UK discretionary and wealth managers. Back-tested performance of the Citi Carry & Value index has seen it deliver an annualised gross return of 12.3% over ten years to August 2013 for an annual 7% volatility target (source: Citi).
