The Potomac Funds, an asset manager which entered the taxable fixed-income market earlier this year, plans to set up a fund to take long positions in the government bond market early next year. The fund would complement its existing government short fund which was launched in May. Neil Kelly, national sales manager in New York, said the fund will be run as a 10-year, two-beta offering, meaning its volatility will be twice that of the 10-year Treasury.
Kelly added Potomac has built a strong client base through its short fund and those clients have expressed interest in a long-only fund. The short portfolio currently has only $25 million under management but Kelly expects its assets to grow in tandem with the new fund, which will allow investors to take offsetting positions.
Potomac, which traditionally focused on the equity market, entered the fixed-income market earlier this year with its two-beta inverse fund and its high-yield fund (BW, 5/31). Kelly said the high-yield fund has ramped up $525 million in assets in the past few months and Potomac will continue to raise assets for its fixed-income products.
