US - Emerging market specialist Finisterre Capital has launched an absolute return fund seeded with US$250m of initial capital from the New York State Common Retirement Fund (CRF).
The Finisterre Emerging Markets vehicle will act as a feeder fund to three of the firm's existing products: Special Situations, Global Opportunities and Sovereign Debt.
The amount allocated to each strategy will be decided by CRF, which has tied into the investment for two years.
The launch came after CRF expressed interest in increasing its exposure to emerging markets through a range of asset classes, including sovereign and corporate debt, local currency debt and currency.
Finisterre is keen to tap into growing awareness among pension funds that long-term investment returns will increasingly be dominated by fast-growing emerging economies.
Last year, Mercer was one consultant to encourage institutional investors to seek bigger investments in less developed markets. (Global Pensions; December 9, 2009)
Finisterre said it is currently in talks with other pension funds as it seeks to promote its new product but would not reveal their names. A spokesman for the group said the fund had a capacity of $2bn.
The target return is dependent on how the investment is split between the underlying funds.
Special Situations currently has a target return of 20%, while Global Opportunities targets 15% and Sovereign Debt, 12%. The allocation decision will lie with the investor.
"We are very pleased about being chosen to manage this significant emerging market allocation on behalf of one of the largest pension funds in the US," said Paul Crean, chief investment officer of Finisterre Capital.
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