Hiscox, the London-based insurer and investment manager, is to launch an offshore version of its glo...
Hiscox, the London-based insurer and investment manager, is to launch an offshore version of its global insurance portfolio.
This will be done by converting the $3.6m FPK Special Situation Fund, a global bank and insurance fund, into a mirror of the £60m UK Oeic, the Hiscox Insurance Portfolio fund.
The move offshore follows investor demand for a Dublin vehicle, although head of investment Alec Foster sees little difference in tax treatment. The intention is for the offshore fund to mirror the onshore fund, although not immediately.
Foster explained: 'The fund will be mirrored in time. I say in time because it currently has $3.6m in it. To mirror a £60m fund ' you cannot do it. As soon as the new fund gets to a size that enables it to mirror the Hiscox Insurance Portfolio, we will do so.'
Foster estimates he needs the fund to get to $20m before he can properly mirror it. Even then, there will be minor differences.
'For example, there may be two reinsurers. One is easier to trade than the other. Then one might go in one fund, one in the other. It is that sort of tweaking we are looking at,' he said.
Nonetheless, Foster is insistent on getting the portfolios as close as is practicable by the end of the year.
He said: 'I do not want to run a selection of funds in the same area with different performance. I just do not want people in fund A to get +10% and people in fund B to get -3%. That would be awful.'
There will be differences in performance due to varying charging structures and this could prove to be the deciding factor for investors looking to squeeze every basis point of performance out of the product.
The onshore fund has an annual charge of 1.25% (with an initial commission of up to 4.5%), while the Dublin fund has a 1% charge plus a performance fee of 10% above three-month Libor, up to a maximum of another 1% pa.
The fund will be renamed, possibly to the FPK Special Insurance fund. The FPK prefix stands for Fox-Pitt Kelton, an investment bank whose fund management arm was taken over by Hiscox.
Part of the handover agreement was that FPK remain advisers to the funds and their name be retained.
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