Chidem Kurdas
The trend for hedge fund managers to start traditional investment vehicles appears to be gaining force, with hedge fund firms across the spectrum considering whether to launch a mutual fund. A growing number are going ahead.
Clarity Asset, an advisor to high-net-worth individuals and families since 1998, is among those entering the fray. An offshoot of the advisory firm manages a hedge fund, Clarity Fund LLC, in addition to separate accounts.
Clarity Fund LLC has a long/short value strategy, implemented with a wide variety of instruments that include stocks, bonds, convertibles, put and call options and futures contracts such as stock index and commodity futures.
Now the same strategy is to be also offered as a mutual fund—with modifications to stay within regulatory limits for instance with regard to leverage. Clarity chief investment officer Bradley Peyton and a portfolio manager, Sayer Martin, will manage the new fund. Mr. Peyton is a lawyer and founder of the advisor business.
With hedge fund investors skittish and capital hard to get, managers look to mutual funds as a way of attracting money. AQR, one of the larger hedge fund managers that went this route, turned a number of quantitative strategies, previously managed in hedge funds, into mutual funds. Clarity is planning to do the same for its strategy.
AQR raised around $1.1 billion (as of this February) with the series of mutual funds launched in the past year-and-a-half. Cliff Asness, the former Goldman Sachs quantitative research chief who founded AQR with other Goldman managers, has said that the decision to enter the mutual fund world is part of an initiative to diversify the business model.
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