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Bailey McCann, Opalesque New York: With event-driven fund performance on pace for the worst year since 2008, it's hard to find an advocate for strategies like merger arbitrage. Yet, investors seem to be lining up behind one strategy out of Paris-based Lutetia Capital, which has more than tripled the AUM for its Lyxor Lutetia Merger Arbitrage Fund since launch two months ago. The fund is now hovering around $200 million after launching with initial commitments of $40 million. The fund also serves as a dedicated managed account for the SGI Merger Arbitrage II flagship Index from Société Générale.
Fabrice Seiman, Managing Partner of Lutetia Capital tells Opalesque that the fund stands out because the team only invests in pure merger arbitrage. "Managers who have suffered the most aren’t pure merger arbitrage players, but event-driven funds focused on special situations. At the end of the day, if you’re doing event driven plus merger arbitrage, your merger arbitrage returns are always going to be tainted –for the good or the bad- by the rest of your event driven book."
The fund focuses on large-cap equities in Europe and North America subject to friendly takeover bids. The portfolio is typically comprised of 50-70 positions with a limited risk budget per deal (1-2% objective). In a low yield environment, Lutetia’s strategy aims to provide predictable returns with a known duration. The average annualized spread for example, is approximately 7% on North...................... To view our full article Click here
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