American Express has launched its third fund of hedge funds aimed at risk-averse investors. The prod...
American Express has launched its third fund of hedge funds aimed at risk-averse investors. The product offering will be further expanded next year through the launch of a guaranteed note linked to the Global Market Neutral Moderate Fund of Funds Portfolio.
The new fund is called the Global Market Neutral Conservative Fund of Funds portfolio and aims to earn 2%-6% per annum over the US dollar three-month treasury bill rate.
Robert Friedman, head of global investment services at American Express Bank, expects strongest demand from conservative clients looking to enhance the yields they receive on their deposits or other cash investments, without encountering significant volatility.
Because this fund is targeting the risk-averse investor, the fund's portfolio is diversified and conservative. Its asset allocation is split among five investment styles, being convertible arbitrage, volatility arbitrage, merger arbitrage, equity market neutral and fixed income arbitrage.
Maximum allocation to individual managers and styles are limited to 10% and 25% respectively.
Sam Perruchoud, fund manager, said the fund now contains 17 managers, but over time this will be increased to 20-25 different holdings.
'Our practice is not to over-diversify our fund of funds but spend considerable time and resources on the selection of our managers to limit risks,' he said.
Minimum investment in the Global Conservative Market Neutral Fund of Funds is $100,000. The fund carries a 1% annual management fee and a 5% performance fee.
All American Express Asset Management's funds of hedge funds are listed on the Irish Stock Exchange.
The other two funds of hedge funds managed by American Express include the Global Long/Short Fund of Funds Portfolio and the Global Market Neutral Moderate Fund of Funds Portfolio. These jointly account for $220m, within some $3bn managed by American Express Asset Management.
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