Challenger International is to launch an Australian equities hedge fund next February making it one of the first locally managed hedge funds to be unveiled here.
The long-short hedge fund is the first of a family of funds Challenger will be launching, says senior manager alternative investments James Chirnside. It is expected the fund manager will also launch Japanese and American equities funds later next year.
“The funds will be very vanilla and transparent to help investors understand what they are investing in,” he says.
The Challenger products are being built to look like a master trust with pick and choose manager options.
Managers for the new Australian fund are being selected at present, although Chirnside hasn’t ruled out it being run internally.
Entry level for the Australian equities fund will be $5000. Chirnside says the low entry fee is to attract people to what is a relatively new investment for Australian.
“We want people to dip their toes in and when they have confidence with hedge funds, they will invest further,” he says.
This will also encourage the wholesale hedge fund market, Chirnside believes.
“There won’t be a demand for wholesale hedge funds until the retail market happens,” he says.
The company has already launched one hedge fund, a arbitrage forward interest rates in the gold market which is available to retail investors. Chirnside admits this fund will probably be difficult to understand for retail investors so they are not expecting large in-flows form that sector. Again it has a $5000 entry point.
The hedge fund market is dominated by US offerings with some 10,000 funds globally. It is estimated that there is about $US500 billion of funds under management in this sector and it is growing fast, especially in Europe, Chirnside says.
In Australia there are a few big private investors in hedge funds, but it is a market that is just developing with most Australian managers concentrating on the wholesale sector. Manager like Rothschild has announced launching Australian hedge funds, but again they are targeted at the wholesale sector
