Montgomery Announces Absolute Return Strategy

by Carla Johnson, Investors Offshore, London

28 January 2002

San Francisco-based Montgomery Asset Management, LLC has announced the selection of Ferro Capital LLC, a New York-based alternative asset manager, to develop an "absolute return" strategy fund-of-hedge funds product line in partnership with Montgomery Partners. The absolute return strategy will seek positive returns with low volatility by targeting a near-zero correlation to major equity and debt markets. These products are intended for use by sophisticated investors, who may work with independent financial advisers, as a complement to their existing core investment strategies and holdings.

"Montgomery Partners was developed with three primary goals," said Montgomery CEO Scott Tuck. "We intend to define and deliver alternative investment strategies as a complement to core holdings; provide access to institutional-quality alternative products managed by carefully selected managers with lower investment minimums; and offer guidance and insight in understanding alternative investments and related investment strategies."

"Because of the high correlation in public markets that we've seen over the last five years, it's become increasingly difficult to achieve true diversification with a 'traditional' investment portfolio," said Montgomery Managing Director Bill Santos. "The addition of a well-managed and properly diversified alternative investment to a core portfolio can offer diversification through low correlation to other portfolio holdings, and potentially improve risk-adjusted returns."

"We are very excited to be working with Montgomery Partners to develop absolute return products offering risk reduction and portfolio diversification," said Ferro Capital founder Kevin Ferro. "We intend principally to pursue five absolute return strategies: equity arbitrage, convertible arbitrage, fixed-income arbitrage, systematic futures and event-driven investing. We feel that this conservative strategy, which targets steady absolute returns with low volatility and low correlation to major markets, can be an extremely valuable complement in an investor's portfolio."

Based in San Francisco, Montgomery Asset Management, LLC is an investment firm managing more than $7 billion in global assets for its clients. An affiliate of Commerzbank AG, the organization is known for its innovative product line and bottom-up securities-picking expertise as an institutional money manager. Founded in 1990, Montgomery is also recognized for offering high quality investment capability to mutual fund investors through The Montgomery Funds. More information is available at www.montgomeryasset.com.

Ferro Capital LLC is a New York-based alternative asset manager formed in December 2001 by Kevin Ferro, formerly the Global Head of Alternative Investment Strategies at Commerzbank Securities. Ferro Capital focuses on providing super premium hedge fund portfolios to sophisticated investors around the world, and draws on the portfolio management, portfolio operations and product structuring expertise of its experienced team of investment professionals.

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