--Robert Murray
Headline Capital Management, a Charlotte, N.C., quantitative hedge fund firm, has today rolled out its third fund, the Headline Mercury Fund. It uses systematic models to take exposure to stocks on the Standard & Poor’s 500 index and will re-evaluate its overall long or short bias on a daily basis, said Mark McClanahan, head of marketing. The fund has been launched with a relatively small amount of money—up to $3 million—from the firm and one undisclosed German client, he said.
Headline Founder Lonny Bernath has been working on the Mercury strategy for several years. The systematic fund uses 200 sub-models to determine the market exposure taken by the portfolio. The firm re-runs the model every day and repositions the fund accordingly. It has a target volatility of 80% of the S&P 500.
The fund will charge 2/20 fees with a $500,000 investment minimum. McClanahan said he will soon begin marketing Mercury, but not as aggressively as the $16 million flagship multi-strategy quant fund, Headline Partners, reasoning that Mercury does not yet have a track record with which to whet investors’ appetites.
Meanwhile, the firm is planning an offshore version of Headline Partners, with which to target foreign investors. The Cayman-domiciled iteration is ready to go and will begin with money from the same German investor that has kick-started Mercury, said McClanahan. This investor will also act as a distributor for Headline Partners throughout German-speaking Europe, and the firm hopes to establish a similar relationship with a distribution partner in the U.K. The flagship has capacity to grow to over $1 billion but the firm would likely stop marketing at around $500 million, said McClanahan.
Headline also runs a $7 million fund, Headline Dynasty, which focuses on correlations between the Asian and U.S. markets. This is closed to investors, with remaining capacity reserved for allocations by the Headline Partners fund.
This article was originally published in Alternative Investment News.
