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Sunday August 07 2022
Magnum's Four New Alternatives

Portfolio International August 1998


       Bahamas-based Magnum Global Investments has launched several new alternative strategy funds aimed at high net worth individuals and institutions.


       The first is a new hedge fund, sponsored by Magnum Global Investments called Princeton Global Fund, which trades in financial markets around the world , and which bases its investment decisions on Princeton Economic International.


       Princeton is the world's largest financial forecasting organisation and one of the largest global advisory firms in the world.


       According to Magnum Global Investments chairman Dion Friedland, PEI's artificial intelligence-based models have forecast virtually every long term change in the direction of the world's capital markets and economics for 15 years, including the 1987 stockmarket crash, the 1994 bond crash and the depreciation of the dollar in 1995.


       "PEI's vast amount of data gives the fund an advantage in anticipating how world capital flows will be impacted by various events," Friedland said.


       Among PEI's current projections, the company predicts the dollar will rise to 170 yen or more next year as Japanese trust funds, allowed by new regulations invest abroad, are likely to spend more than $1 trillion buying US Treasury bonds. This would lead China to devalue its yuan and Hong Kong to devalue its dollar since those countries need weaker currencies to keep their exports competitive, according to Martin Armstrong, an economist and PEI chairman.


       The second new fund is the Scott Performance Fund, sponsored by Magnum, which gives investors the opportunity to invest in South Africa through flexible hedging strategies that seek profits regardless of the direction of markets.


       "We aim to capitalize on all major moves in the market -downward as well as upward. We can buy undervalued stocks, sell short over-valued stocks, and use futures and options to control market risk," Friedland said


       Third is the Magnum Enhanced Return Fund, a fund of funds, which invests in non-market correlated hedge fund strategies on a leveraged basis.


       This fund, open from this month, will mirror the portfolio of the less leveraged Magnum Special Situations Fund.


       Magnum promotes the fund as safe investment in hedge funds and trading strategies that offer the promise of steady but safe returns through investment in special situations, fixed income securities, merger arbitrage, convertible bond arbitrage. distressed securities, market neutral securities, hedging, mortgage backed securities and other non-market correlated trading strategies.


       "Magnum Enhanced Return Fund benefits from strategies that are not dependent on the direction of stock and bond markets," said Friedland.


       Investing in a selection of hedge funds that are specialist practitioners of the strategies, Magnum Enhanced Return Fund seeks leveraged returns of 15 to 25 per cent per year regardless of the direction of stock or bond markets.


       The final launch is another new fund of funds, Magnum Europe Equity Fund, to capitalize on investment opportunities in Europe, and to complement geographic region hedge funds already available.


       It will invest with some of the premier European focused equity hedge funds and aims to outperform but be less volatile than the Morgan Stanley Capital International (MSCI) Europe over a sustained period of time. The fund will take advantage of Europe's large diversified growing market and the expected continued trend of consolidation of European industries.


       "With the imminent arrival of European Monetary Union and with a single currency on the horizon, the restructuring of sectors and industries is likely to accelerate," said Friedland. "This should improve return on equity in Europe, as deregulation and increasing public sector and corporate restructuring continue to pave the way for growth in European equity markets.


Product Briefing


       1) Princeton Global Fund. Minimum investment is US$250,000. There is no initial charge, annual management fee is 5 per cent, and there is a performance fee of 20 per cent of net new profits per annum. Distributors can collect up to 3 per cent in initial commission and the product is also distributed direct to high net worth individuals and institutions.


       2) Scott Performance Fund. Minimum investment is US$100,000. 'Mere is no initial charge, an annual management fee of 1.5 per cent per annum, a performance fee of 25 per cent of net new profits per annum, and an initial 2 per cent commission may be collected by distributors.


       3) Magnum Enhanced Return Fund. Minimum investment is US$100,000. No initial charge, no annual management fee (as all of the assets are invested in Magnum Special Situations Fund, which has a 1.5 per cent annual management fee), no performance fee. Distributors may collect up to 5 per cent in initial commission. This one is also distributed direct to individuals and institutions.


       4) Magnum Europe Equity Fund. Minimum investment is US$ 100,000. There is no initial charge; there is an annual management fee of 1.5 per cent, and no performance fee. Distributors can claim an initial commission of up to 5 per cent and the fund is also distributed direct.

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