A quarter of a century after Reno's Jones & Co. introduced its first investment fund, the company thinks the timing is right for a second.
It rolled out its Draco Fund at the start of this year, and the new fund in its first few weeks attracted about $12 million from investors, says Kyle Ferguson, a Jones & Co. vice president.
The new fund looks to use a multi-strategy approach, trading futures, equities and options. Its investment time frames are very short no more than 30 days for most holdings, 60 days for some futures contracts.
"We've always been traders," says Ferguson. "We don't know what the markets are going to do. We view the markets on a very short-term basis."
Instead, the company's chief trader, Michael Abbott, looks for investment ideas everywhere from academic studies to chart patterns that have shown up in financial markets in the past.
When he sees an opportunity from a market move either up or down, Draco's strategy is to move into it quickly and out again just as quickly. The fund looks to use little leverage to enhance its positions but expects that wide diversification will boost its returns.
Abbott will use proprietary computerized trading systems he's developed since joining Jones & Co. in 1990.
Along with Abbott and Ferguson, managing directors of the fund include Trinidad Guillen and Jeffrey D.
Jones.
There's no management fee for the Draco Fund. Instead, Jones & Co. will take the first 25 percent of the profits in any year in which the fund finishes with a new record high a "high watermark" in the language of investment funds.
The fund is open to buyers identified by the Securities and Exchange Commission as "accredited investors" people with a net worth of more than $1 million or income of more than $200,000 in each of the past two years.
Minimum investment is $100,000.
The fund's name is derived from a hundred-headed dragon of mythology, a beast that could attack in
multiple directions.
The Draco Fund is the second for Jones & Co., which operates with a staff of five from its South Meadows headquarters.
The company, founded by commodities trader Deane Jones, created the High Sierra Futures Fund in 1984. That fund, since renamed High Sierra Partners, now operates as a fund-of-funds that invests in hedge
funds.
High Sierra Partners, with $114 million under management, posted a profit every year since its inception except for 2008, when it recorded a loss of 13 percent.
Last year's downturn in the stock markets, Ferguson says, creates opportunities for investment managers.
"Everyone is scared," he says. "Everyone is looking for something new."
