16/03/2011
By Laura Blows
A new asset management company has launched, which aims to outperform local inflation and to preserve and grow purchasing power in the investors’ designated currency.
Domiciled in Switzerland, Blue Diamond Asset Management will provide a range of funds based on its strategy to maximize real returns. Funds will be structured to outperform the most relevant measure of inflation for investors and denominated in the appropriate currency. Performance fees will only be charged on returns after inflation.
Its return strategy comprises a valuation process that calculates the fair value of asset classes in real terms - be it global and domestic equity, bonds and cash - based on mean reversion over a full market cycle. Capital is then allocated to undervalued asset classes and removed from expensive asset classes. Then the momentum process provides diversification by profiting from price trends.
The boutique investment management company is headed by Alex Orus, who was previously the managing director of GMO in Europe and, before that, was managing director of State Street Global Advisors AG, Switzerland.
CIO Alex Orus commented: “After the financial crisis, investors started to reevaluate how they allocate their assets and how they perceive risk. In the past, the focus has been on nominal returns and beating asset benchmarks.
“Investors are now realising that one of their biggest risks is the failure of their asset performance to keep pace with inflation, which can erode capital over a surprisingly short amount of time. Our strategy will address this, not merely by protecting against inflation but by seeking to consistently deliver returns above it. Our risk management process involves avoiding bubbles and crashes, thus minimizing downside risk.”
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