Deutsche offers leveraged fund-of-hedge-funds
Deutsche Asset Management(DeAM) will offer margin lending for its hedge fund-of-funds after striking a deal with Tricom Equities with the latter to co-distribute the product to retail investors.
As part of the arrangement DeAM’s fund-of-hedge-funds, the Strategic Value Fund, will be co-distributed through its own channels as well as through Tricom which will provide the margin lending capabilities on the product.
DB Absolute Return Strategies Asia Pacific head Glenn Poswell says the move to offer the gearing on its hedge fund product was due to the rising interest in investing in hedge funds and margin lending.
According to Poswell margin lending on hedge funds has only recently been seen as a way of achieving higher returns with lower volatility as compared to margin lending for equities or other traditional asset classes.
To back his case he says, “The volatility of SVF over the past 12 months was just over 4 per cent, compared to almost 11 per cent for theAustralian Stock Exchange’s All Ordinaries Index.”
Poswell says the fund has also delivered positive returns in more than 80 per cent of months since launching in December 1999 resulting in DeAM and Tricom offering a higher loan to valuation ratio (LVR) of 75 per cent.
As part of the offering DeAM and Tricom will offer the 75 per cent LVR at an interest rate of 7.89 per cent for the margin loan, available to the end of July.
Minimum investment in the fund will be $25,000, however using the 75 per cent leverage facility investors will only need to supply $6250 of their own funds, which Tricom managing director Lance Rosenberg says makes an institutional product, normally reserved for a minimum investment of $500,000, available to retail investors.
The DeAM Strategic Value Fund is a multi-manager, multi-strategy hedge fund and is run by its Absolute Return Strategies group. Assets under management in the fund have grown by more than 30 per cent over the past year and are currently at $290 million.
AUTHOR
Jason Spits
Recommended for you
Clime Investment Management has welcomed an independent director to its board, which follows a series of recent appointments at the company.
Ethical investment manager Australian Ethical has cited the ongoing challenging market environment for its modest decrease in assets over the latest quarter.
Commentators have said Australian fund managers are less knowledgeable compared with overseas peers when it comes to expanding their range with ETFs and underestimating the competition from passive strategies.
VanEck is to list two ETFs on the ASX next week, one investing in residential mortgage-backed securities and the other in Indian companies.
