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Bruno Crastes’ boutique launches two liquidity-focused funds

Bruno Crastes’ boutique launches two liquidity-focused funds

H2O Asset Management has launched two new funds designed to address problems caused by limited liquidity in the current market, the London-based boutique has announced.

The new funds, which are both Dublin-domiciled, are called the H2O Barry Active Value and H2O Barry Short and are set to be followed by a third, yield-focused strategy in either 2017 or 2018.

Both of the new funds will be overseen by Vincent Chailley, who is chief investment officer for H2O AM and is a named manager on five funds at the group at present.

Announcing the new funds, H2O AM, which was founded by global bond manager Bruno Crastes, said these strategies would be the first in the world designed solely to respond to the scarcity in liquidity caused by regulatory imposition on financial institutions.

Commenting on the launches, Citywire AAA-rated Crastes said: ‘The objective of the Barry funds is to offer investment solutions leveraging today’s market predicaments and to turn these constraints impacting the performance of traditional asset classes into investment opportunities.’

The H2O Barry Active Value fund will focus on value and invest in money market instruments when the markets are quiet. It will then adopt a short-term trading view when markets are deemed volatile or irrational.

Meanwhile, the H2O Barry Short fund will position itself for sharp rises in global interest rates, while benefiting from carry in excess of cash in-between these upsurges. H2O said it would benefit from the ‘brutal and significant’ magnitude of interest rate rises and the impact on government bonds.

The H2O Barry Short fund will use a portfolio of actively managed options that offers a small positive carry over cash before this sizeable one-off event takes place.

Both funds were formally launched on 1 December 2016. The H2O Barry Short fund has accrued €30 million in assets since inception, while H2O Barry Active Value has garnered €40.1 million.

Why is it called Barry?

In a statement to Citywire Selector, H2O AM said the name ‘Barry’ for the new fund range reflects the most famous St Bernard rescue dog, who lived from 1800-14 and saved over 40 lives.

‘The legend began to spread in Europe a few years later notably with the painting by Edwin Henri Landseer on which the dog carries a barrel to bring relief to lost travellers, which is exactly what our funds are going to do.’

The spokesperson said it would have three areas of ‘relief’ for investors: 1) bring relief to global markets when they require the now scarce resource that is liquidity; 2) bring relief to banks facing an increase need in capital, the other scarce resource; 3) bring relief to investors that face risk without yield in traditional asset classes.

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