Cape Town-based Tantalum Capital has launched a new fund with a higher risk-return objective than its existing products, in response to client demand.
The Tantalum Focus Fund went live on November 1 with R17 million under management. It has capacity for R300 million.
The fund focuses on South African assets, catering to investors at the upper end of the risk spectrum, including high-net-worth and institutional investors who are seeking significant real returns while protecting against downside risks.
This is the fourth strategy from Tantalum, which was formed in 2005 by a senior ex-Coronation team including Morne Marais, Richard Kommel, Rob Oellerman, Melanie Stockigt, Michael Lawrenson and Derek McDonald. It is 100% owned by the six senior investment professionals, focusing purely on managing alternative assets in the South African space. Other team members include Alet Venter as trader, Samiya Paulsen as operations assistant and Janine Heiberg as office manager.
Tantalum now has R1.5 billion under management across its product range including the flagship multi-strategy Tantalum MNC Fund, the fixed interest Tantalum Fusion Fund and a segregated market-neutral mandate, which it will roll out to other investors should there be demand.
Tantalum MNC Fund and Tantalum Fusion Fund have performed well since launch, aiming to achieve above average real returns over the medium term (three to five years) at lower than average volatility. The funds have returned 11.5% and 13.05% respectively in the year to the end of October, after both returning double-digit gains in 2009.
The team currently has capacity for R2.5 billion across its fund range. It has a bottom-up research-heavy approach, setting clear objectives for its funds while looking to understand hidden and combined risks in all portfolios.
“Our strategy over time is to build big positions if we have high conviction, particularly in unloved sectors,” said Marais. “If we have bigger ideas and we believe in them we will stick to them for the longer term.”
The new fund is based on the same set of underlying ideas with fewer positions and a more concentrated book, with variable direction exposure. The number of positions can vary depending on if and where the team finds high-conviction ideas. The fund is expected to have a more volatile return profile and should generate higher returns.
Oellerman says the new fund caters to changes in the market place, with some investors switching from a ‘one size fits all’ approach to offering more risk-profiled products.
As with the MNC fund, the new product will be mostly equity focused but can include government and corporate bonds as well as preference shares should the research process identify such opportunities. Copyright. HedgeNews Africa – November 2010.
