Dalton Strategic Partnership (DSP), the investment specialists, will launch the MST European Fund on 1st February 2010 as a sub-fund of the Melchior Selected Trust, a Luxembourg SICAV. The new Fund will aim to deliver positive absolute returns, uncorrelated to equity or bond markets.
Managed by Leonard Charlton, a former portfolio manager at GLG and trader at Goldman Sachs, the Fund will follow the same investment approach as his current hedge fund, the Melchior European Fund. Launched in October 2006, that fund achieved a positive return of +8.01% in 2007, +6.26% in 2008 and +4.29% in 2009 which places it in the first quartile of Morningstars universe of European equity long/short funds. Since launch, the Melchior European Fund has returned 22.2% compared with a return of -16.6% of the MSCI Pan European Index.
This return has been achieved with an annualised volatility of 6.43%, less than one third of the volatility of the MSCI Pan European Index.
The MST European Fund marks the first time the long/short investment capabilities of Leonard Charlton will be available to investors in a regulated product. The new Fund will use the full UCITS III powers including leverage and derivatives to replicate the strategy employed by the Melchior European Fund.
We believe that the time is right to launch a UCITS-compliant version of the Melchior European Fund, says Magnus Spence, Partner at DSP. The MST European Fund is an ideal vehicle for those investors looking to invest in a European equity long/short fund via a regulated product, which draws on Leonards hedge fund management experience. The new Fund will implement the same strategy as the existing hedge fund which Leonard has managed so successfully over the last 3 years. We do not envisage any changes to the strategy arising from the UCITS structure. Leonard is an outstanding absolute return fund manager who demonstrated his ability to deliver consistent, positive returns in weak market conditions during 2008 when he achieved positive returns in 10 out of 12 months that year. He is also one of the very few hedge fund managers to make a positive return in both 2008 and 2009. He has trading and shorting in his blood.
The MST European Fund combines a fundamental approach to selecting long and short positions, with an active trading overlay. The Fund will comprise 30-60 positions, normally in individual European stocks and will typically operate within a net exposure range of +/- 20%. Gross exposure will normally be between 80%-150%.
Fund Management Team
Leonard Charlton, Fund Manager, has 11 years experience in trading and investment. He started his career as an equity trader for Goldman Sachs before moving to GLG in 2003 to work with the European Long/ Short team where he was a Co-manager of the GLG Europe Opportunities Fund in 2004/2005. He joined DSP in 2006 to launch the Melchior European Fund.
David Robinson, Analyst, has 5 years experience in investment. He joined DSP in 2005 after qualifying as a lawyer at Freshfields Bruckhaus Deringer. He started his investment career on the Melchior North America Opportunities Fund in 2005-06, before joining the European team for the launch of the Melchior European Fund in October 2006. David has a degree in Modern History from New College, Oxford.
BENJAMIN BILLIARD, Analyst, has 7 years of financial markets experience. He started his investment career as a sell-side analyst covering Telecom Services at Merrill Lynch. He joined the buy-side in 2006, initially covering Telecom Services and Banks at Alken and subsequently as an analyst at Gandhara Capital, a long-short equity fund. Benjamin has a business degree from HEC and an MBA with concentration in finance from The Wharton School.
DANIEL BLAKE, Trader, has 22 years of market experience. Prior to joining DSP in 2002, Daniel was Head of Trading at Magus Asset Management for a period of nine years. He has also been Head of Trading at Enskilda Asset Management.
Key features of the fund:
Fund domicile: Luxembourg
Fund structure: Socit dInvestissement Capital Variable (SICAV)
Administrator/Custodian: Banque Prive Edmond de Rothschild
Currency: available in Sterling, Euro and US dollars (all hedged).
Minimum Investment $10,000 for retail investors in A & C share classes, $250,000 for institutional investors in B & D share classes.
Management Fees 2.0% for retail investors in A & C share classes and 1.5% for institutional investors in B & D share classes.
Performance fees: 20% of returns in excess of 1 month EURIBOR. A high-water mark hurdle also applies.
Liquidity: Daily
Distributor status: U.K.
D.C.