Fulcrum Asset Management, one of the few asset managers to make money in 2008 as the GFC unfolded, has opened up its multi-asset absolute return fund to Australian retail investors.
Fulcrum was established in 2004 by former Goldman Sachs investment banker Andrew Stevens and manages approximately $8.5 billion, of which $2.6 billion is Australian institutional money.
Speaking to InvestorDaily, Mr Stevens said the fund has no official benchmark, but has an objective of inflation plus 3 per cent to 5 per cent a year over rolling five-year periods.
The strategy has achieved its objective since inception in 2008, he said – adding that the fund only has 0.2 correlation to equity markets and has a permanent equity hedge in place.
That hedging strategy paid dividends in 2008 when long-only managers were hit hardest by the global financial crisis, Mr Stevens said.
“We had insurance in the equity market [in 2008], and we also had insurance in the bond market,” he said.
“So if bond yields collapsed, as they did then, we would have very good outsized gains. At the time the US Fed moved first, but [the European Central Bank] hadn’t moved, nor had the [Bank of England].
“So the ability to get exposure to the bond market at very attractive prices in the event that yields did drop was the opportunity that we took advantage of,” Mr Stevens said.
As a result, the largest gains for the fund in 2008 were in the UK and European bond markets, he said.
Fulcrum still has insurance in place now, noted Mr Stevens, and with the current low levels of volatility in equity markets, it is very cheap.
“So most of our hedging is in the equity markets. However, we’re not of the view there’s going to be a crash, so we do have reasonable equity exposure,” he said.
