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H2O Asset Management today announced that it is expanding its product
range with the launch of the H2O Barry funds.
H2O Barry Active Value and H2O Barry Short, both Irish UCITS, are the first funds
specifically designed to address the problems associated with the current scarcity of
liquidity in the marketplace following the regulatory crackdown on financial institutions.
“The objective of the Barry funds is to offer investment solutions leveraging today’s
market predicaments and to turn these constraints impacting the performance of
traditional asset classes into investment opportunities” said Bruno Crastes, H2O’s CEO.
The funds will aim to offer investors new sources of performance and diversification
benefits.
Commenting on the Barry Funds launch, Vincent Chailley, CIO, H2O Asset Management
added: “The current financial system is definitely more robust as systemic financial crises
are much less probable. However it is also characterised by more market distortions and
it is prone to market shocks due to the massive drop in the liquidity provided by banks.
The lower systemic risk makes these shockwaves less contagious and this pattern can
offer attractive opportunities to flexible and responsive asset managers.”
- Investment rationale of the Barry Funds
H2O Barry Active Value aims to tap value from the new market environment. When
markets are quiet, it invests in money market instruments. When a shock occurs, and as
long as it is not deemed the result of a fundamental regime change, Barry Active Value
steps in with a short term trading view.
“In a way, Barry Active Value brings liquidity to the markets when it is the most needed,
and it is paid for it” explains Loic Guilloux, head of H2O’s New Business Development.
H2O Barry Short positions itself to gain from sharp rises in global interest rates, while
benefiting from a carry in excess of cash in-between these upsurges. Above and beyond
its bearish positioning on G4 Govies, the fund derives a part of its value from the brutal
and significant magnitude of interest rates rises, due to the lack of liquidity that banks
can nowadays provide to Govies markets. Barry Short uses a portfolio of actively
managed options that offers a small positive carry over cash before this sizeable one-off
event takes place.
H2O intends to launch additional strategies in the Barry range in 2017 and 2018. The next,
Barry Yield, is a strategy that will derive its revenues from fees paid by banks looking to
get a capital/liquidity relief benefit by entering into transactions that will decrease their
Risk Weighted Assets (being on Operational, Market or Credit and Counterparty Risks),
hence the cost of capital associated.
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