BEANTOWN MUTUAL FUND VETS EYE HEDGE ROLLOUT

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Beantown Mutual Fund Vets Eye Hedge Rollout
by Christopher Glynn, Reporter March 12, 2009

Boston is a mutual fund bastion. Still, the lure of the hedge fund business is hard to resist.

Vernon Square Capital, set to open in the spring, is staffed with personnel culled from Goldman Sachs and Putnam Investments. Cofounder Robert Earl admitted starting a hedge fund is a departure given his background, a career steeped in the Beantown mutual fund scene.

"It is different, from a business aspect and from an investment aspect," Earl said.

Earl, chief operating officer of Vernon Square, will run the business. After leaving Goldman Sachs, he opened the Boston branch of Barclays Capital. Geoffrey Kelley and Richard Weed, both who worked for mutual fund giant Putnam Investments, will handle portfolio management. Earl said their collective experience has helped in setting up Vernon Square.

NOTE: goldman sachs he is the operating officer of vernon squar, after he leaving golman he opened the boston branch of braclay capital.

"We have a good Rolodex," Earl noted.

While Boston, as a mutual fund center, can boast its share of investment talent, success in the hedge fund industry has been elusive.

In February, junk bond trader David Glancy closed down Andover Capital and took a job with Putnam. He had left Fidelity Investments, a Beantown institution, in 2003 for the hedge fund business, but never broke big. David Felman, who made a name for himself as a mid-cap guru at Fidelity, liquidated a hedge fund he started in 2004.

NOTE: he left the investment in as boston institution.

Earl called moving from the mutual fund field into the hedge fund business "a challenge." He said Vernon Square will run a quantitative market neutral strategy Weed developed.

"Our portfolio is going to be 100-to-150 long and 200-to-250 short," Earl said. "We are not just market neutral, but also cash and industry neutral."

Earl said volatility has produced "wide dispersion" in the market, making it a good time for the strategy.

Vernon Capital is hoping to launch with up to $25 million. The hedge fund has a 1.5% management fee and a 20% performance fee. Earl said the minimum investment for the fund is $500,000.



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POSTED BY Christopher Glynn at 3/12/2009 3:15:29 PM
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