Morley Fund Management has launched the UK’s first property derivatives hedge fund, a $150m (£76m) vehicle designed to invest primarily in property derivatives.
The fund, launched by subsidiary ORN Capital, is one of a number of new entrants to the sector. These entrants are taking advantage of the increasing maturity in the property derivative market and the associated strong investor demand.
ORN Capital portfolio manager Chris Iley said: “We are looking at derivatives and securities but will focus on derivatives. We will be able to use all the investments available. The liquidity in property derivatives is still limited however, it is improving.”
Iley said the fund would have less than 50% of its $150m target size invested in the underlying market. The rest will be invested in relative strategies, such as counterbalancing investments in the retail and offices sectors. According to Iley, this could push the fund’s gross exposure to two or three times the size of the fund.
Two other property hedge funds have been announced, concentrating on taking long and short positions on property equities.
Sarasin Chiswell has launched its Real Estate Equity IIID Fund, which will invest in REITs. It intends to achieve a relative return of 3.5% above the UK Retail Price Index over three years.
CB Richard Ellis Financial has joined forces with Reech Alternative Investment Management to create a hedge fund specifically designed for UK investors.
Last week (20 January, p53), EG revealed that Portland Capital was also launching a hedge fund.
