Quilter seeds fund launch from US hedge fund manager

Quilter has provided the seed capital to launch a defensive US equity fund from hedge fund manager Logica Capital Advisers.

The Logica Asymmetric Beta fund pairs a derivatives-based volatility strategy (Logica Tail Risk), aimed at producing payoffs during times of market stress, with passive exposure to the S&P 500, resulting in a US equity fund with a built-in defensive overlay. 

Logica’s investment philosophy centres on exploiting structural inefficiencies created in the market by widespread short volatility exposure held in more traditional strategies. The fund’s strategy aims to provide consistent long volatility exposure to benefit when markets become unpredictable or experience sharp movements, while limiting the opportunity cost of this exposure in normal environments through well-tested trading strategies designed to capitalise on mean-reversionary behaviour. 

Combined with the S&P 500 exposure, the fund is expected to give Quilter a defensive strategy to be included within the US equity portion of its asset allocation, capturing a lower proportion of the S&P 500’s down-side moves than the proportion of up-side moves over time.

The fund will be added across all risk profiles, to varying degrees, within the Cirilium and Cirilium Blend portfolios.

Logica Capital Advisers is a California-based hedge fund manager and has been running a similar strategy in the US since 2015. The fund is managed by Chief Investment Officer Wayne Himelsein and his portfolio management team including former UCLA mathematics professor David Taylor PhD and head of trading/risk Patrick Rentz, as well as Chief Strategy Officer Justin McEntee, who joins the portfolio team on the Investment Committee.

Ian Jensen-Humphreys, portfolio manager of the Cirilium portfolios at Quilter, said: “We are always on the lookout for funds that are genuinely doing something different to the market and where we feel it can add significant value to the portfolio. We want to use our scale to bring new and interesting funds to the portfolios that clients would not otherwise have access to. 

“In this case we were looking for a new US equity exposure that provided good protection in times of market stress, while still having the ability to outperform when markets are strong – cognisant of the current market environment. We believe we have found this through Logica and are excited to add the fund to the portfolios.

“The team has an impressive background of experience, rooted in mathematics, volatility trading and risk management. They have demonstrated considerable upgrading of the strategy over time to reduce risk, making this a good option to provide defensive exposure to our US equity allocation.” 

Wayne Himelsein, Founder and CIO of Logica, added: “Logica was built around the core philosophy that reliably mitigating the downside can be one of the most powerful ways to improve long-term upside. Investors should not have to choose between the benefits of owning equities and the material drawdown risk that comes with it.

“After so many years of refining this focus, we are delighted to partner with Quilter so that our defensive solution can be deployed at scale and bring value to so many of their clients.”