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Tuesday, May 27, 2014|
Lazard Gets The Ball Rolling on New Funds
Lazard Asset Management, the New York-based money manager that handles $160 billion, with $25 billion in a variety of mutual funds, launched a new long/short equity fund, the Lazard Fundamental Long/Short Portfolio (LLSIX; LLSOX), a strategy based on bottom-up stock selection, and an emerging market short-duration currency and local debt fund, the Lazard Emerging Markets Income Portfolio (LEIIX; LEIOX) in the end of last month. Both have longer track records as separate accounts.†
The firm is also considering launching an international concentrated equity strategy that would focus on 20-25 stocks later this year. That fund has not been registered with the SEC yet.
Jamie Schachtel, head of Lazardís Capital Advisory Group, which is responsible for servicing family offices and registered investment advisors, said this is the firm's usual process: to first run the funds as separate accounts, either with Lazard seed money or institutional mandates, with the intention to eventually launch them in mutual fund form, if the structure makes sense for the strategy. Retail investors and advisors will often want longer track records in a strategy before vetting it, but he said the strategies track records' in other forms could sometimes suffice.
The fundamental long/short strategy is the firm's first equity foray into the liquid alternatives space, and Schachtel said Lazard has other plans in the works in this area, but couldn't share details yet. All of Lazard's mutual funds are managed by internal PMs.
The long/short fund recently reached its three-year track record of being run in separate account form, so it was a good time to take it out to the retail market.
"It was always built to handle daily liquidity," said Jerry Liu, a PM for the fund.
This fund has a broad opportunity set and could handle up to $10 billion, Liu added. It costs 164-194 basis points, depending on the share class.
The strategy returned 6.8 percent for the three years ending Dec. 31, falling about half short of the S&P 500's 14.7 percent returns in that time, but besting the HFRX Equity Hedge Index, which lost half a percent in that time, according to fund documents.
The new launches come on the back of another emerging market fund, the Lazard Explorer Total Return Portfolio (LETIX, LETOX), an emerging market debt total return fund that was launched last year and has over a three year track record as a separate account vehicle. This fund has a total/absolute return mandate, said Schachtel. "It's designed to try to make money in any environment and can short or go to cash to do that," he explained.
Lazard is marketing its mutual funds to a broad range of retail investors and financial intermediaries, including registered investment advisors, independent advisors, brokerage firms, wirehouses, family offices and other mutual fund shops that use sub advisors. The firm has been increasing its sales staff to market its strategies, although Schachtel couldn't share specifics.
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