Manager Mike Nicol says the number of positions that could realistically be monitored has been reduced by having only one other co-manager, Alistair MacDonald.That has just changed, with the hire of Polish national Dariusz Sliwinski, formerly head of emerging markets for nearby Martin Currie, also in Edinburgh. Sliwinski may start feeding some Eastern European ideas into the fund, a possible prelude to the launch of his own Eastern European vehicle. Midmar’s first UCITS fund has gathered €8 million on top of €15 million in seeding, taking assets to €23 million.
The strategy isn’t making a top down macro call in terms of its division between defensive and economically sensitive holdings: it has the same number of each, based on correlation analysis that tries to avoid concentrations of factor exposures. Nicol says that in recent months good profits have come from both cyclicals, such as autos and mining, and defensives, like drugs, drink and tobacco.
Amongst the largest five long positions are two tobacco companies. The attractions here include visibility of earnings, good dividend yields backed by cash-flows, decent growth and reasonable valuations that leave room for multiple expansion.
Currently Midmar is only net short of information technology and financials. This need not imply any negative overall view of those industries. The stories are stock specific.
McDonald, who focuses on banks, is worried about their capital adequacy in the face of new Basel rules. Autos and capital goods are also part of McDonald’s bailiwick, while Nicol specialises in consumer goods, oil and gas and tobacco. The two of them both look at industrial goods and services.
They go back a long way, to their shared days at Scottish manager Dunedin. McDonald was earlier lured away from Scotland to Asia and Australia where he held fund management positions. Nicol is effectively the lead manager, and has had ten consecutive profitable years running long/short European equities.
Key details
Fund name: Merrion European Absolute Return Fund
Management company: Merrion Investment Managers
Promoter: Merrion Investment Managers
Status: Open
Inception date: 29th June 2010
Strategy
Kind of fund: Hedge Fund
Strategy group: Long/Short
Region: Europe All
Asset classes: Equities
Particulars
Currency: EUR
Share class name: EUR B
ISIN: IE00B5450N81
Bloomberg ticker: MERCEAR ID
Domicile: Ireland
Listing: Irish Stock Exchange
Fund structure: Investment Company with Variable Capital
NAV calculation: Daily
Liquidity: Daily
Notice (banking days): 1
Minimum investment: 250,000
Min. investment currency: EUR
Income: Accumulative
Fees
Entry fee: 0%
Exit fee: 0%
Management fee: 1.5%
Performance fee: 20%
High water mark: Yes
Hurdle rate: No
Analysis
Year to date: - 3.59%
Annualised return: 8.66%
Annualised volatility (monthly data): 7.14%
Sharpe ratio (2%) (monthly data): 0.93
Correlation to S&P 500 (monthly data): 32.57%
Correlation to iBoxx (monthly data): - 13.92%
