Pacific Asset Management (Pacific) announces the launch of the Pacific Efficient Diversification Fund, a UCITS strategy designed to provide investors with access to alternative risk premia through a transparent, liquid and cost-effective investment vehicle.
The fund seeks to deliver diversified returns that are independent of traditional equity and bond market performance by systematically investing in proprietary alternative risk premia across global interest rate and foreign exchange markets.
The launch follows growing demand from UK and European allocators for cost efficient diversification strategies that can provide cash plus returns without the illiquidity, complexity, high fees and opaqueness often associated with many systematic hedge funds, managed futures and alternative investment strategies.
Managed by Pacific’s Diversifying Assets and Quantitative Investment teams, led by Louis Cucciniello and Ross Wright, respectively, the fund combines five individual risk premia strategies across interest rate and foreign exchange markets, providing exposure to three of the most extensively researched and academically validated investment factors: value, momentum and carry. The investment process is implemented through a simple yet highly disciplined, rules-based framework.
The fund targets returns in excess of overnight cash rates and operates within a robust risk management framework, including an 8% volatility target, a maximum leverage limit of two times and multiple layers of systematic risk oversight. It will offer full transparency of holdings, trades and underlying methodology. The fund launches with a management fee of less than 20bps, with anticipated transaction costs of less than 10bps.
Unlike many alternative strategies, the fund does not rely on equity beta to generate returns. By bringing this capability into a UCITS fund structure, Pacific aims to provide multi-asset allocators with a transparent and cost-efficient way to access genuinely diversified sources of return without materially increasing overall portfolio costs.
The underlying investment approach has been deployed within Pacific’s multi-asset portfolios since December 2018 and the sleeve currently manages approximately £75 million using the same investment framework. The launch marks the first time the capability has been made available through a standalone daily-dealing UCITS fund for external investors.
Matthew Lamb, Chief Executive Officer of Pacific Asset Management, said:
“Investors are increasingly looking for diversification that is genuine, transparent and cost-effective. Too often, alternative strategies come with higher fees, limited transparency and complex implementation. We believe there is no premium for complexity. The Pacific Efficient Diversification Fund is designed to give investors access to robust risk-managed diversification in a simple, transparent and cost-efficient UCITS structure.
“This is not a new strategy created for a fund launch. We have been using these simple non-equity related risk premia techniques within our multi-asset portfolios since 2018 and have built the technology, risk management and operational infrastructure required to implement them consistently at scale. The launch allows a much wider group of investors to access a capability that has already been proven internally.”
Louis Cucciniello, Head of Diversifying Assets at Pacific Asset Management, added:
“By focusing exclusively on highly liquid Rates and FX markets, we can provide investors with access to alternative sources of return that are designed to complement traditional portfolios. The strategy combines decades of academic research with practical implementation experience, offering a transparent alternative to more complex hedge fund-style diversification solutions.”
Ross Wright, Head of the Quantitative Investment Team, said:
“We believe simplicity should be visible to clients, not complexity. While the investment process is deliberately straightforward, it is supported by proprietary technology that enables us to monitor and manage risk and execute trades systematically at scale. That combination of simplicity in philosophy and sophistication in implementation is a key differentiator for the fund.”
