Absolute Capital to list first hedge ETFs

Absolute Capital will list three retail hedge funds it launched in July on theAustralian Stock Exchange(ASX), to be available to master trusts, wraps and retail investors via an exchange traded fund (ETF) vehicle.

Believed to be a first for alternative funds, the Absolute Return Fund, The Equity Long/Short Strategies Fund and the Yield Strategy Fund, each with $5 million under administration, will list on the ASX tomorrow.

Absolute Capital head of distribution Joshua Goben says the main driver of adopting an ETF vehicle was to give the mezzanine market, or master trust and wrap account administrators, the ability to get daily pricings on the funds.

“By listing the funds, the funds can form a component of a traditionally managed fund product and therefore can be priced daily,” he says.

“This now closes the gap between hedge funds and traditional managed funds in terms of liquidity profiles.”

Goben says up until now, a perceived drawback for master trust and wrap administrators, and ultimately the retail investor, was that hedge fund prices were obtained monthly, which means there is a lag of three weeks towards the end of the month between the real price and the actual price of units in the funds.

He expects that with daily pricing available, financial planners will get more confident in recommending them to clients. The funds now listed on the ASX will be distributed amongst all mezzanine and retail platforms such as master trusts, as well as directly to financial planners.

To list the funds, Absolute Capital was required to design an internal registry to keep track of all investments, Goben says.

Absolute Capital managing director Dean Joubert says the benefits to investors will be that they will be able to enter and exit the funds more easily.

“The fact that people can now gain immediate entry to the funds and extract their capital at any time means these investments will become more attractive to both financial planners and retail investors,” he says.

Absolute Capital expects the funds to grow to about $100 million in the next two to three years. The funds are based on retail prospectuses with shares issued at $1 each, and a minimum subscription of $2000.