•  
• Tweet
•  
•        Print
•  
•         Track Keywords
•  
• 

All of KDC’s funds have gained from arbitrage opportunities in securities lending and M&A, as well as from the distressed markets, in October and YTD.

The KDC Alpha Securities fund, which replicates the prime brokerage industry’s proprietary matched book securities lending business, gained 0.22% (est.) last month and 4.41% YTD. The $77.7m fund’s traders utilize proprietary trading systems and deep professional networks to identify lending rate arbitrage opportunities within the "hard to borrow" securities lending markets. It charges 2% for management and 20% as an incentive, subject to high water mark (HWM).

Securities are usually lent to cover short positions (i.e. if the borrower has sold stock which he does not already hold and needs to cover that position). Some of the arbitrage opportunities in securities lending, according to Dublin-based Rubicon Investment Consulting, can be found in varying tax treatments of different classes of investors which may offer the possibility of a higher tax paying lender loaning a stock to a lower tax paying borrower over the dividend period. There can also be opportunities for arbitrage if a company is offering a choice between taking a dividend as cash or shares at a discounted price.

The New York-based investment advisor's $31.5m KDC Merger Arbitrage fund, which was formed in 1981 and offe......................

To view our full article Click here