Hendry savages long/short ‘greed’
Hugh Hendry at Eclectica is the latest manager to launch a Ucits III version of a hedge fund strategy, but is highly critical of the trend towards “me-too” absolute return products that emerged this year.
“The long/short Ucits phenomenon is just a greedy phenomenon,” says Hendry. “It is the ‘Nth’ iteration of the investment community to raise money.
“It is outrageous that managers with no long/short experience have the audacity to charge a performance fee. They should prove over three years that they have the experience to manage long/short.”
The Eclectica Absolute Macro fund, which will be launched on December 31, will have a similar remit to the hedge fund but will not charge a performance fee.
At launch it will have little invested in equities, as Hendry takes a contrarian stance in the portfolio. “Our equity position today would be no more than 20%, and a high proportion would be high yielding equities and the largest companies,” he says.
Hendry favours stocks with a high dividend yield and low gearing. His preferred sectors include tobacco and utilities.
Corporate debt will form about another 20% of the portfolio, with a fair proportion in German 30-year and Australian 10-year government bonds.
The portfolio will also be contrarian in its geographical allocation. Hendry says: “The rest of the world is overweight emerging markets, but we have nothing. The rest of the world is terrified of the dollar. We are trying to create some positive dollar exposure.
“If you add up our gross positions, we won’t be fully invested,” he adds. “We are not taking lots of risk.”
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