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Martin Asset Management to offer hedge fund replication strategy through ETFs

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Tarzana, California-based alternative investment boutique Martin Asset Management has launched investment strategies based on exchange-traded funds

Tarzana, California-based alternative investment boutique Martin Asset Management has launched investment strategies based on exchange-traded funds that it says are able to replicate hedge-fund-like returns and risk factors without heavy fees, lock-ups and non-transparent holdings.

“Our approach allows investors to obtain the very same benefits as they would with a hedge fund without the limitations usually associated with hedge funds,” says Francisco Martin, senior managing director of the firm he founded in February 2007.

“We use an investment philosophy similar to global tactical asset allocation that attempts to exploit short-term market inefficiencies by taking positions in various markets with a view to profiting from relative movements across those markets.

“The approach focuses on general movements in the markets rather than on performance of individual securities within them. Positions are generally taken with a relatively short-term time horizon of three to six months, hence the term tactical asset allocation, and in markets across the globe, hence global.”

Martin Asset Management does not levy an annual management fee but has a 10 per cent performance fee with high water mark. “The transparency of a separate managed account and the elimination of all hedge fund-imposed barriers make our approach much more attractive to the investor,” Martin says.

Earlier this year Martin Asset Management established the Ilios Alternative Energy Fund, a long-biased fund that invests in public companies involved in wind, solar, hydro, geothermal and biomass energy, and hedge certain exposure using inversely correlated ETFs from PowerShares.

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