The former managers of Macquarie’s High Conviction Fund are launching a listed investment company and will be undertaking an initial public offer on the ASX.
Firetrail, a boutique investment management firm, is headed up by Patrick Hodgens and James Miller, who had both managed the Macquarie High Conviction Fund from its inception in 2005 until late last year.
The company’s investment strategy is modelled on the Firetrail Absolute Return Fund, which has been running since March.
The ethos of Firetrail is to be a market-neutral portfolio fund of both long and short Australian equities.
Mr Hodgens, Firetrail managing director and portfolio manager, said Firetrail was created off the back of his team at Macquarie wanting to be able to offer company equities.
“The only way to keep the team together was to offer equity and unfortunately Macquarie was unable to do that, so in October last year, the whole team left Macquarie and created a new boutique called Firetrail,” said Mr Hodgens.
Mr Hodgens said that what made Firetrail stand out is that they do not short on themes and instead aim to insulate their clients from market volatility, said Mr Hodgens.
“What we are aiming to do and what we have done is eliminate the risk or insulate our clients away from risk that we can’t control. We try to insulate the portfolio from those large thematic positions in the market,” he said.
Mr Hodgens said that Firetrail was a firm for investors who want great returns without the daily ebbs and flows of the market.
“We want clients who want a significant return above the cash rate but don’t want that daily volatility of the equity market,” he said.
Firetrail head of distribution and investment specialist Kyle Macintyre said that, ultimately, Firetrail would be a vehicle for investors to access alternative equities.
“Investors that can’t access through traditional platforms want to have access to a diversified equity-based portfolio. Alternatives is something they didn’t have access to. We wanted to provide a vehicle for them to access those alternatives,” said Mr Macintyre.
Mr Macintyre said the goal for Firetrail was to deliver returns that were above the RBA cash rate and that they had had success doing so before.
“Internal target is 7 per cent above the RBA cash rate and we have been able to do that through time with the strategy that we ran at Macquarie,” he said.
The offer for Firetrail opened today and will close in October this year with an aim to raise in excess up to $305m with an ability to accept oversubscriptions up to $375m.