Dalton unveils European absolute return fund

Boutique Dalton Strategic Partnership (DSP) is to launch a European-focused absolute return 'Newcits' fund based on its successful hedge fund strategy.

The MST European fund will launch on 1 February 2010 by former GLG fund manager Leonard Charlton. The Ucits III fund, which will sit within the firm's Luxembourg-domiciled Melchior Selected Trust Umbrella, opens up Charlton's hedge fund strategy, Melchior European, to the broader market.

According to Dalton, the strategy has returned 22.6% since its launch in October 2006 compared to a return of -16.6% in the MSCI Pan European Index. The return has been achieved with an annualised volatility of 6.43%, less than a third of the volatility of the benchmark.  

The strategy also held up well in the market turbulence of 2008 and 2009, returning 6.26% and 4.29% respectively.  

The MST European fund will comprise 30-60 positions, usually in individual European stocks and will typically operate within a net exposure range of +/- 20%.  Gross exposure will normally be between 80%-150%.

DSP will levy an annual management charge of 2% on retail investors and 1.5% for institutional. Investors will also be subject to a 20% performance fee on returns in excess of 1 month Euribor with a high water mark hurdle applied.