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Hedge fund Phylon's launch was ill-timed, but its partners' application of emerging market experience to European equities has impressed investors. Julie Dalla-Costa reports.
Investor appeal: Phylon's two partner-managers, Christophe Beauvilain (left) and Ralf Laier, bring experience and knowledge of core European and emerging markets
LAUNCHING A ROADSHOW on September 11 2001 was not the luckiest start for Phylon Investment Advisors. "I took an easyJet flight to Geneva and when I got to the hotel I saw what had happened on TV," recalls the firm's founder, Ralf Laier.
Needless to say, the roadshow wasn't particularly successful.
But since that unpromising start, Phylon's flexible investment style, the experience of its two partners and decent performance has been attracting funds at a steady clip. It more than tripled assets under management between September 2003, when the fund had $8 million, and February 2004, when it closed its book at nearly $30 million.
Phylon's European multistrategy hedge fund was launched in October 2001 with a discounted management fee of 1% to help distinguish it from the competition and attract cost-conscious investors.
After two years of running the fund, in October last year Phylon introduced a new offer before the planned closing of its initial share class. This included a guarantee of investment capacity in its next share class at the same discounted management fee of 1% and the option not to invest if Phylon didn't raise at least $20 million.
Phylon closed its existing share class at the beginning of February, and then launched another with a higher management fee of 1.5%, in line with the market standard. In addition, Phylon decided last month that it would close its fund later this year because of capacity constraints.
Phylon's style is primarily to take bets across three equity strategies. These are European directional long/short, relative value and special situations. In total, 75% of capital employed goes into these three. "We use opportunistic long/short stock picking across various strategies, hence our investment strategy does not often fall into the traditional investment categories defined by investors," says partner Christophe Beauvilain. Opportunism
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