Edinburgh-based fund management group SVM Asset Management is to launch the UK Absolute Return Alpha fund – a vehicle which the firm says is equipped for volatile market conditions and designed to profit from both rising and falling share prices.

SVM is of the view that the market volatility of 2008 will continue through 2009, and that given this unpredictability any attempt to time markets is doomed to failure. Colin Mclean, managing director of SVM AM, who will manage the UK Absolute Alpha fund, will therefore invest in UK equities using a long/short investment approach that is based on bottom-up company analysis.

“The crisis has proved that experts have no monopoly on wisdom or information and there is a lot of information available beyond that provided by companies and city analysts,” said Mr Mclean.

“At SVM we do not rely on these sources and avoid making investment decisions based on traditional measures such as earnings per share, which can be manipulated by company boards. By concentrating on top line measures such as cash conversion and operating profit margin we can identify the companies with the fundamentals to do well despite the recession, and also those which might suffer as a result of deteriorating trading, balance sheet weakness or high valuation.”

The SVM UK Absolute Alpha fund will close to new investment when assets reach £200 million ($288 million), a limit which the firm says will enable the fund to successfully maintain its investment strategy and flexibility.

SVM is aiming for its new fund to deliver returns in excess of cash (as measured by LIBOR) over 12 month periods, and to substantially beat cash over all three year periods. Through a full market cycle SVM expects the fund to outperform the FTSE All Share Index.

The launch period for the SVM UK Absolute Alpha fund will run from 11 March to 7 April 2009, enabling investors to invest both their 2008/09 and 2009/10 ISA allowances in the fund.

SVM aims to generate positive returns over the long term, rather than positive performance each month, and therefore recommends three years as an appropriate time frame for investment.

Founded in 1990, SVM is a privately owned investment management boutique which manages assets for both retail and institutional clients.  The firm’s principal specialisations are UK and European equities, and multi-asset fund of funds, and as at 31 December 2008 its assets under management stood at £500 million.