12/09/2009

New GLG Fund Showcases Equity Portfolios

Hedge fund giant GLG Partners is repackaging its key equity strategies for a fund that began trading last week.

The vehicle, GLG Global Equity Tactical, deploys capital to existing management teams across five portfolios: relative value, emerging markets, volatility trading, financial-services stocks and pan-European equities. Prior to the addition of the new fund, the equity teams managed portfolios ranging from $70 million to $390 million.

The $22 billion London manager teed up the vehicle in response to investors seeking broad exposure to GLG's equity strategies, which outperformed both the broader stock markets and various hedge fund benchmarks last year. Until now, the only way to get exposure to the firm's stock-trading teams was via single-strategy equity funds or multi-strategy vehicles.

Back-testing a simulated portfolio modeled on the new fund showed average annual returns of 21.5% going back to 2005. That included a 21% gain last year, when hedge funds lost an average of 18%. This year, the simulated portfolio has gained around 22%.

Helming the new vehicle are David Sanders, co-manager of GLG Financials Fund, and Warren Touwen, who came aboard last year to conduct behavioral analysis of the firm's European equity traders. Touwen previously worked at Merrill Lynch as a portfolio manager and director of the bank's global strategic risk group. Sanders, a Goldman Sachs alumnus, has been at GLG since June 2006.

While the fund charges typical fees of 2% of assets under management and 20% of gains, early backers of the effort are being charged just 1% of assets and 15% of gains. Investors are allowed to withdraw on a monthly basis with 30 days' notice.

One of Europe's largest hedge fund operators, GLG invests in both equity and credit markets around the world. Just last week, the firm named John Gieve, former deputy governor of the Bank of England, as a senior advisor.

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