Calif. Firm Preps Alt. Energy Hedge Fund

Date: Thursday, January 3, 2008
Author: FINalternatives

Tarzana, Calif.-based Martin Asset Management is ushering in the New Year with a pair of launches.

Next month, the firm will launch its Ilios Alternative Energy Fund, a long-biased vehicle, with between $10 million to $15 million in assets. The firm will also serve as a sub-advisor to an exchange-traded fund strategy to be rolled out at the end of March.

Ilios will invest in a range of public companies involved in wind, solar, hydro, geothermal and biomass energy, and will hedge certain exposures using inversely correlated ETFs.

“We don’t use leverage, derivatives or futures because they’re added risks to the portfolio,” said Francisco Martin, founder. “We use a lot of PowerShares [ETFs] to get downside protection when we deem it necessary.”

Martin said the fund is investing in companies such as First Solar, a product manufacturer for solar power plants, because of the performance of its stock and the fact that it “probably has the best track record of all the solar energy companies out there.”

He also said that investors are looking to invest in more alternative energy funds as oil prices top the $100 mark. “We’re seeing $115 to $120 per barrel, which will make alternative energy more feasible.”

The fund charges a 2% management fee and a 20% incentive fee with a $500,000 minimum investment requirement

Martin is also sub-advising an ETF-specific strategy dubbed the Integris Global Index Plus Fund, which is slated to launch on March 31 with some $10 million in proprietary capital. Martin said the fund is mostly replicating the performance and risk performance of the HFRI Index by going long and shorting certain ETFs. Thirty percent of the fund will be a global, macro opportunistic strategy that will “add alpha to the beta.”

The Integris fund charges a 1% management fee and a 15% performance fee.

Prior to starting Martin Asset Management in February 2007, Francisco was a co-founder at MAM Wealth Management in Los Angeles. The firm currently manages $124 million in separately managed accounts.