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Hercules Investments CEO/CIO James McDonald

Fund News Advisors Can Use: Hercules Leads With Volatility

This week in fund news: Hercules debuts fund amid unprecedented volatility, the growing interest in impact investments in Black communities and Hamilton Lane’s continued push into the wealth channel.

This last week has seen some wild swings in the stock market, especially among heavily shorted stocks, such as GameStop and AMC Entertainment Holdings, a frenzy that was prompted by a group of Reddit traders. That’s a good backdrop for alternatives asset manager Hercules Investments’ new mutual fund, which seeks to profit from stock market volatility.

The Hercules Fund (ticker: NFLHX) will invest in liquid alternative assets, taking short-term long and short positions in call and put options in the main U.S. stock indexes.

Of course, Hercules did not create the fund with the GameStop frenzy in mind. The uncertainty around COVID-19 and risks of rising inflation were the impetus for launching the fund.

“These are incredibly uncertain times for the stock market and for investors,” said James McDonald, CEO and chief investment officer of Hercules Investments, who will serve as portfolio manager of the Hercules Fund. “The tragic COVID-19 pandemic has shed light on the deficiencies of traditional 60/40 portfolios and the importance of a sophisticated liquid alternatives asset allocation strategy.”

More Companies Invest in Black Communities

There’s a growing number of publicly traded companies that have made impact investments targeted at Black communities.

In the past 15 months, ServiceNow, Micron and Airbnb have partnered with RBC Global Asset Management to create investments aimed at supporting underserved communities. Starbucks and Salesforce have also made similar impact investments, although not through a partnership with RBC.

Ron Homer, chief strategist of U.S. impact investing at RBC Global Asset Management, says the increased interest in such impact investments has been driven by the pandemic, as well as the civil unrest in cities as a result of the shootings of George Floyd, Breonna Taylor and Ahmaud Arbery, which sparked a surge in interest in racial equity.

“People have become a little bit more knowledgeable about the tremendous disparities in wealth and income among Black and Latino citizens in the U.S.,” Homer said. “In corporate America, there’s been a heightened awareness that it’s not good for business to have such a racial divide and that it’s hard to sustain the country with this much social unrest. So a lot of corporations who have the means have decided to see if they can help weigh in and ameliorate the situation.”

RBC GAM has about $1.5 billion in impact investing assets under management, as of the end of 2020. About $1.3 billion is in its Access Capital Community Investment Fund. The firm’s impact strategies focus on home ownership, affordable housing and small business development.

“We believe those are keys to building stable communities,” Homer said.

Hamilton Lane to Buy 361 Capital

Hamilton Lane, an alternative investments shop that has historically targeted institutional investors, announced plans to acquire 361 Capital, a Denver-based boutique alternative manager, in an effort to expand its presence in the U.S. private wealth channel.

The deal is a continuation of Hamilton Lane’s efforts to bring its strategies into the wealth management space. The firm recently launched a new 40 Act fund that will bring its private equity and private credit strategies to a wider pool of investors. The Hamilton Lane Private Assets Fund, a closed-end fund, will be available to qualified U.S. clients with a minimum $50,000 investment.

“We recognized the strategic opportunity and benefit of making the private markets accessible to a broader universe of investors, and enabling them to gain access to the asset class’s return potential,” said Erik Hirsch, vice chairman and head of strategic initiatives at Hamilton Lane, in a statement. “Bringing on the experienced and strong team from 361 Capital furthers our ability to deliver on that objective.” 

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