Bailey McCann, Opalesque New York:
36 South, a London-based hedge fund specializing in volatility investing, is launching a new product as a result of demand from US institutional investors. According to Anthony Limbrick, Principal and Portfolio Manager for 36 South, the recent low volatility environment is fueling strong institutional demand, particularly from private pensions, for exposure to volatility as a cheap source of investment returns with negative correlation benefits.
"The money coming in through those pension funds is ERISA money and the problem with taking that money is that it can only be 25% of a fund so we wanted to create a vehicle in the US that would take on more of that demand," he tells Opalesque. The Employee Retirement Income Security Act of 1974 (ERISA) is a law that governs the allocation and treatment of pensioner money in a US public pension fund. Public pensions are under certain legal obligations to maintain diversity of their investments and preserve capital for pensioners.
The new fund will launch on May 7, and is essentially a version of its long volatility flagship fund. The company has also registered with the SEC. "This is an exciting time for our strategy because volatility is approaching lows not seen since the 2006-2007 period that set up our flagship's +73%* returns in 2008," Limbrick says.
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