Hedge funds to tackle retail investors
Deutsche Funds Management has joined the first wave of hedge fund providers to offer a product to retail investors, with a new fund to be distributed through master trusts and superannuation funds.
Deutsche Funds Management has joined the first wave of hedge fund providers to offer a product to retail investors, with a new fund to be distributed through master trusts and superannuation funds.
The Deutsche Strategic Value fund is aimed at financial planners and superannua-tion funds to complement a balanced portfolio of traditional investments, such as equities, fixed interest, property and cash. The group says most people will look to allocate between 10 to 20 per cent of their portfolio to the fund.
A number of master trusts have already added the fund to their menus, including Bridges' Portfolio Service, Garrison's Synergy and Money Planners' Personal Choice. Deutsche says there are a number of others currently researching the product with a view to include it in their menus in the near future.
Deutsche's move follows that of Hedge Funds of Australia (HFA), which launched three hedge funds last year. However, unlike HFA, this fund is based on the in-vestment performance of four US-based hedge fund managers.
Deutsche Strategic Investment Group manufactures the product, which uses the funds management capabilities of Halcyon, FLA, Clinton Group and AIG.
Deutsche Bank director David Zobel says the four funds are some of the biggest players in the hedge fund market worldwide. FLA, for example, has about $7 bil-lion under management. All four funds used by Deutsche have varying styles but all concentrate on the market neutral hedge funds.
Zobel says the fund offers lower volatility than an equities fund but with supe-rior performance potential to fixed interest products.
"It aims to neutralise any market swings by taking long and short positions on stocks and debt," he says.
Like HFA, the Deutsche fund also features a performance-based fee structure. There is a base management fee of one per cent plus 15 per cent of the return above the Warburg Dillon Read Bank Bill index.
"We are trying to align the interests of the fund manager with that of the in-vestors," Zobel says.
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