group plans feeder vehicles to invest in Fund of hedge funds
Baring Asset Management is to offer retail investors access to its Hedge Select fund of hedge funds.
At present the Cayman Islands fund has a minimum investment of $100,000 but the group is looking to set up two further structures allowing access to the vehicle in the autumn.
Richard Graham, head of institutional marketing at Barings, said the feeders to the fund, most probably domiciled offshore, would allow investors access to the same underlying portfolio.
While declining to state a lower minimum investment for the variations, Graham said it would be 'only coincidence' if the timing of any launch of Barings' new variations coincided with FSA's proposals to allow marketing of hedge funds onshore to retail investors, due this summer,
'Most of our clients want an offshore structure and quite a lot of them are not UK citizens,' Graham said.
'There would be nothing stopping you cloning the product and having it registered onshore if there was the market demand for it. Putting more assets into the same product means the total expense ratio comes down.'
Presently the Baring Select hedge fund of funds, with a portfolio of $120m is held mainly by high net worth individuals with some smaller institutional investors. Barings runs a further $330m assets for institutional investors in funds of hedge funds products.
Since its launch in November 1999 Barings' fund has made 10.6% annualised returns with an annualised standard deviation of 3.1, roughly half that of global markets. US Treasury bills have returned 5.3% annualised. Barings' fund of funds has had only three months of negative returns, none more than '1%.
Over the past year the Barings fund has increased its exposure to single strategy hedge funds specialising in long/short equity strategies, now 40% of the portfolio. About 9% is held in distressed debt and distressed equity funds.
Barings will not be the only fund of fund manager to launch new products in Europe this summer.
Banque Privee de Edmond de Rothschild in Luxembourg is also planning to launch a fund of funds focusing on between five and six market neutral funds.
On investors' wishes, the fund of funds will take a far more focused approach than Rothschilds' other funds of funds, which generally have between 20 and 25 underlying investments.
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