Serafin Diversified Arbitrage
Fund size USD 12.3m
Past performance is not a reliable indicator of future performance. Please note that the aforementioned performance is shown in the fund currency USD (US Dollar) and not Euro and therefore currency influences in investment currencies other than the fund currency are not taken into account in the performance shown.
The Serafin Diversified Arbitrage Fund is a global risk arbitrage fund with daily liquidity. The fund is currently aimed at qualified investors in Switzerland.
The investment approach consists of combining various arbitrage strategies, particularly in the areas of merger arbitrage, convertible bond arbitrage and event-driven soft catalysts. The core of the portfolio is invested in low-risk merger arbitrage transactions and aims to exploit arbitrage spreads in a global universe. Another part of the portfolio is invested in an arbitrage strategy for convertible bonds that aims to exploit price inefficiencies in this asset class and achieve carry. These two investment components are complemented by tactical investments in other risk arbitrage strategies, including spin-offs and holding structures, which provide additional uncorrelated sources of alpha and have the potential to enhance returns and diversify the portfolio.
Portfolio Management
- Jonathan Stanford
- Investment Manager
- jonathan.stanford[at]serafin-am.com
- +41 (91) 942 71 71
- Roberto Bottoli, CFA
- Investment Manager
- roberto.bottoli[at]serafin-am.com
- +41 (91) 942 71 71
Publications
Two Pager | Alternatives
Breakdown by currencies
Breakdown by countries
Comment March 2024
In March, global M&A market activity decreased compared to the previous month and was particularly weak in the US. No big cap transactions, above the USD 10 billion threshold were announced during March. The majority of the market is represented by strategic acquisitions while private equity-driven buyouts are still scarce and small in size. The most sizeable deal announced in the month was the acquisition of Equitrans Midstream by EQT Corp. in the US oil and gas sector. The fund allocates resources to those M&A deals where the arbitrage spread is correctly rewarding the risk of termination of the transaction. So, we are currently avoiding some situations either with large potential losses in case of the deal failure like the takeover of MorphoSys by Novartis, or with tight spreads like the acquisition of Vizio Holding by Walmart that potentially could raise antitrust concerns. During the month the fund was involved in the acquisition of Roland DG in the consumer electronics sector in Japan: the company received a counter-bid that resulted in a roughly 10% gain on the position.
The convertible bond primary market continued the trend seen in February with substantial issues coming from the US and none from Europe. Notably, the tech/crypto sector seems to take center stage in the US with large issues from Coinbase and Microstrategy. We also had a large USD 1 billion issue from NextEra at the end of February. Valuations have cheapened somewhat over the month. A large synthetic in LVMH issued by JPM was pulled from the market because of its excessive pricing, indicating that investors are paying closer attention to valuation. We are continuing to focus on hedged convertible bond positions with higher deltas, which provide high levels of carry and good credit protection and are trading substantially below fair value. We have added five new positions as we continue to increase the allocation and move to a fully invested portfolio.
| Domicile of fund | Luxembourg |
|---|---|
| Legal form | SICAV (AIF) |
| Investment universe | Global |
| Investment manager | Serafin Asset Management Ltd, Zug |
| Management company (ManCo) | Lemanik Asset Management S.A., Luxembourg |
| Custodian bank | UBS Europe SA, Lux. Branch |
| Launch date | 15.12.2023 |
| Recommended investment horizon | 5 years |
| Reference currency | USD |
| ISIN / Bloomberg-Ticker (respective share class) | USD: LU2718004018 / SEDIARU LX CHF: LU2718003986 / SEDIARC LX EUR: LU2718004281 / SEDIARE LX |
| Distributions | reinvesting |
| Subscription and redemption | daily (cut-off 15.00 CET) |
| Tax transparency | CH, AT |
| Tax status Germany | Investment funds with any subsequent certification |
| Registered for distribution to qualified investors only | CH |
Gebührenstruktur
| Subscription and redemption fee | none |
|---|---|
| Management fee p.a. | Share Class USD: 0.70% Share Class CHF: 0.70% Share Class EUR: 0.70% |
| Profit sharing | A performance fee of 15% of the returns generated above the respective risk free rate (USD SOFR, EUR ESTR, CHF SARON) is charged. |
| Total expense ratio p.a. (per tba; TER) | tba |
| Duration | Fund |
|---|---|
| 1 month | -0.2% |
| 3 months | 0.7% |
| 12 months | - |
| since inception p.a. | 2.4% |
| Year | |
| 2024 | 0.7% |
| 2023 | 0.1% |
| since inception | 0.9% |
The gross performance takes into account the costs incurred at fund level (e.g. management fee) without including the costs incurred at investor level (e.g. front-end load and custody fees). The net performance also takes into account an initial sales charge of 0.00% in the first period under review.