Sprott Asset Management LP, the Toronto-based firm founded by Eric Sprott, started its first global macro multimanager fund as it seeks to attract institutional investors seeking low volatility.
The Sprott Macro Managers Fund was seeded today with an undisclosed amount of the firm’s own money, according to Co-Chief Investment Officer John Wilson. The fund will have eight portfolio managers focused on various asset classes, all of whom already work at Sprott, including Wilson and co-CIO Scott Colbourne, he said yesterday in a telephone interview.
Sprott, which has about $1.2 billion of its $9.9 billion in hedge-fund assets, is seeking to lower price swings while profiting from a strategy that uses macro-economic indicators to invest across asset classes. The portfolio managers will choose securities based on recommendations from a macro committee led by Sprott, Marc Faber, the publisher of the Gloom, Boom & Doom report, and Rick Rule, chairman of Sprott U.S. Holdings. They will also seek recommendations from a five-person group in charge of asset allocation, Wilson said.
The new fund is “certainly supposed to have less volatility than some of our other strategies have had in the past,” he said.
A number of Sprott’s strategies have had investments in precious metals, which have contributed to higher volatility, Wilson said. Precious-metals stocks contributed to losses in some of Sprott’s hedge funds last year, according to a July e-mail to the firm’s investors obtained by Bloomberg News. Sprott Hedge Fund LP fell 18 percent this year and 34 percent in the past year, as of March 28, according to the firm’s website. Sprott Opportunities Hedge Fund LP rose 6.6 percent in 2013 and 2.3 percent in the last year.
Sprott Macro Managers Fund will mainly trade in stocks of energy, precious metals and large-cap companies, bullion, currencies and fixed income, Wilson said. The fund is maintaining a low net exposure, which is calculated by subtracting its shorts, or wagers that securities will fall, from its longs, or bets that assets will rise in price, he said.
There is no set target or capacity for assets in the fund, though $1 billion “would not be challenging,” Wilson said. Its prime brokers are Credit Suisse Group AG and Canadian Imperial Bank of Commerce.
“We are substantially more cautious on equity markets than we would have been six months ago,” he said. “We do see opportunity in precious metals, particularly the miners.”
Sprott, founded in 2000, manages long-short equity and credit funds as well as mutual funds.