Castlestone Management

Castlestone Management Inc., established in 1996, is an independently owned asset manager based in the British Virgin Islands. The firm’s distribution service provider has offices in Hong Kong, London,and Chichester. Commodities take up the bulk of the funds managed by the company, with a focus on real assets such as gold bullion and precious metals. In 2010 Castlestone launched a Next 11 Emerging Markets fund ^[1] and more recently, Equity High Yield & Premium Income Fund.^[2] The firm places emphasis on the long term, investing in asset classes and funds likely to outperform over a 10-year period, with the goal of protecting investors against the devaluation of money over time.^[3] According to Castlestone Management's investment philosophy, the company aims to provide funds that are liquid, transparent, do not use leverage and only hold liquid instruments.

History

Castlestone Management was founded in 1996 by former Co-Head of the International Equity Department, NatWest Markets USA and President of the Macquarie Bank USA (1997-2000) Angus Murray,^[4] who serves as Castlestone Managements current Chief Executive Officer (CEO).

The company was incorporated to be the investment manager of a series of British Virgin Islands funds. Castlestone originated from a European Family Office and gradually developed to concentrate on providing funds and services to financial intermediaries and their clients, as well as institutions. Castlestone Management opened their doors first to outside investors before establishing its Aliquot Gold Bullion fund in 2003, concentrating on the growing interest in precious metals in the international investor community. Castlestone Management operates in the following jurisdictions: Europe, North Asia, Southeast Asia, Latin America, Middle East, and South Africa.

Building on the success of its 2013 “Public Status” Mutual Fund, Castlestone unveiled its Equity High Yield & Premium Income Fund in March 2014.^[5] Designed to generate sustained growth in the long term, the Fund offers investor benefits such as transparency, liquidity, and no leverage. The Fund invests in stocks with dividend yields ranging from 4% to 6%, particularly consumer staples with noteworthy defensive attributes. The Fund generates premium income by writing covered calls, which limits potential downside in the event of equity market decline. At the time of the announcement, the Castlestone Equity High Yield & Premium Income Fund included semi-monopolistic assets with relatively inelastic demand. Early portfolio stocks include HSBC, AstraZeneca, and Sydney Airport. The Fund connects investors with a variety of high dividend yield and premium income strategies, many of which were offered by stable, large capitalisation companies. The Fund also represented a substitute for long-only developed market equity funds.

In August 2015, Castlestone announced the formation of its Emerging Markets Equity High Yield and Premium Income Fund, formerly known as the “Next 11 Emerging Markets Fund”.^[6] Composed of a wide range of stocks from the United States, South Korea, Brazil, China, Taiwan, and Singapore, the Fund continues Castlestone’s focus on semi-monopolistic and exchange-traded equities. Available to a number of offshore platforms located outside the United States, the Fund will sell covered call options on underlying stocks with characteristics such as viable option markets, high dividend yields, quality fundamentals, and inelastic demand.

Investment Strategy

The Castlestone investment strategy centres on foresight and meeting the long-term investment objectives of its investors.^[7] Castlestone focuses primarily on capital preservation and the power of cumulative returns, enabling it to identify assets with a high potential for favourable returns in the future. After seeking out companies with constant or expanding cash flows, the firm looks at balance sheets to determine dividend sustainability and economic performance.^[5] Over the years, the firm has invested in numerous companies throughout the United States, Singapore, the UK, the Netherlands, Germany, Japan, Hong Kong, and Australia. In terms of target sectors, Castlestone operates primarily in defensive, non-cyclical sectors such as telecommunications, infrastructure, utilities, and pharmaceuticals.

The second phase of the Castlestone investment strategy involves the generation of premium income, defined as writing out of the money covered calls on a portfolio’s underlying equities. Although premium income generation can place a cap on an asset’s full upside, it continues to generate income when equity prices decrease. Together with buying stocks in consumer staple industries, Castlestone’s focus on premium income generation ensures high fund performance in static or downward-trending markets.

Fund Range

Castlestone Management Inc. aims to deliver funds that are liquid, completely transparent, do not use any leverage and only hold liquid instruments.

Equities

Castlestone Management Inc. offers equity funds that allocate to semi-monopolistic, price-inelastic, high yielding equities. Castlestone Management has two main equity funds. A Developed Markets Equities Fund and an Emerging Markets Equities Fund:

• Equity High Yield & Premium Income Fund Inc.^[8][9]
• Emerging Markets Equity High Yield & Premium Income Fund Inc.^[6]

Real Assets

Castlestone Management Inc. offers funds which provide direct exposure to real assets such as Gold and Precious Metals,^[4] these include:

• Aliquot Gold Bullion Inc.
• Aliquot Precious Metals Inc.
• Aliquot Platinum Group Metals

Current Chief Executive Officer

Castlestone Management’s current Chief Executive Officer (CEO) is Angus Murray, Castlestone Management’s founder and owner.^[10] Angus Murray was born in 1970 in Australia and became the co-head of the International equity department at NatWest Markets, USA in 1989.^[11] Murray founded and concurrently became the CEO of Castlestone Management in 1996, and served as the President of Macquarie^[12] Bank USA whilst serving as CEO of Castlestone, between 1997 and 2000. Angus Murray received his Bachelor of Financial Economics in 2001 from Birkbeck University of London, England.

Controversy

In 2012, Castlestone Management Incorporated became involved in a regulatory investigation in the British Virgin Islands (BVI) after the regulator there launched a probe into its funds. The BVI’s Financial Services Commission (BVIFSC) brought in Grant Thornton to investigate the fees and expenses being charged by eight funds managed by Castlestone Management Inc and domiciled in the offshore financial centre. The regulatory investigation concluded in 2013 with NO adverse findings.^[13]

In July 2011 the FSA raided the offices of Castlestone Management Limited a UK company acting as Investment Manager for Castlestone Management (EU) Limited to a range of UCIT funds, a separate company to Castlestone in the BVI.^[14] In September the EU wound up its listed funds and on 30 September, the UK firm ceased trading and administrators were called in.^[15]

Industry recognition

Castlestone Management has seen industry recognition for its work in the investment sector with awards presented both to the company itself and for its funds. Castlestone’s Porcupine Global Macro Plus fund^[16] was twice a finalist in the “Best Performing Global Macro Fund” category at the Hedge Fund Awards, in 2007 and 2009.^[17] The company was also “Highly Commended” at the 2009 International Fund and Product Awards and at the 2009 Hedge Funds European Performance Awards,^[18] held in May of that year. In addition to this its Aliquot Gold Bullion Fund was selected as a constituent of the HFRX Index in both October 2009 and March 2011.

References

External links

• Castlestone Management home page
• Castlestone Management on LinkedIn
• Castlestone Management on Twitter
• Castlestone Management Blog