first in a series of four passive strategy fund of hedge funds offers investors hedge fund exposure with risk limited to a single strategy
London-based investment management firm Global Investment Advisors (GIA) has launched a passive strategy fund of hedge funds, the first in a series of four.
The GAIM Market Neutral Fund, which is domiciled in the British Virgin Islands, will invest in up to 20 of the leading index constituent hedge funds of the market neutral sub-index of the CSFB-Tremont Hedge Fund Index.
Its assets will be allocated to the largest investible hedge funds by asset size. Minimum investment in the fund is E100,000 or $100,000, as GAIM is available in both euro and dollar shares.
The move follows the launch of a multi-strategy tracker fund of hedge funds in August last year, aimed at attracting both retail and institutional investors, with a minimum investment of E10,000.
The multi-strategy product invests assets in up to 20 hedge funds, allocated to the five largest funds by asset size in the CSFB-Tremont Hedge Fund Index, in four main strategies ' macro, market neutral, long/short equity and event driven. The aim of the fund is to allow investors to gain hedge fund exposure through a diversified portfolio, while reducing their risk exposure to a single strategy.
GIA intends to launch a fund of hedge funds for each of the four strategies included in the multi-strategy fund of hedge funds, along similar lines.
The GAIM market neutral fund is the first step in this process.
Market neutral was chosen as the first launch because of its popularity at the moment, said Emanuel Arbib, chief executive officer of Integrated Asset Management, the parent company of GIA and co-founder and chairman of GIA.
'Our strategy is to invest in the products that are what investors require right now,' he added. 'We have four regional sales directors around the world and this is their consensus.'
The next launch in the series will be a long/short version in the autumn.
GIA has been investing in hedge funds for more than 10 years concentrating on fixed income for most of that period. This has given the company access to many closed hedge funds, which is an advantage over less established managers, Arbib said.
The company keeps its investments completely transparent to investors, disclosing all of the underlying funds and weights in the portfolio. 'We believe there is no real magic in it,' said Arbib. 'If people feel they can watch what we do, and do it on their own, go ahead. We have the advantage that we can get into many closed funds.'
GIA is also marketing capital protected notes, which are being arranged by Lehman Brothers International (Europe) and are linked to the performance of GAIM Market Neutral.
These capital protected notes provide 100% capital protection at maturity as well as exposure to the underlying fund.
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