Rothschild offers hedged equity funds

Rothschild Australia Asset Management(RAAM) has expanded its product suite to include a retail and wholesale international equity fund offering that is fully hedged to the Australian dollar.

The Five Arrows Discovery Global Hedged Fund is the culmination of several months of development and the retail fund has been designed to provide greater choice to investors, Rothschild International Equities business manager Anne Rozenauers says.

“This [product] is to give investors more choice. Some investors are not comfortable with taking both equity risk and currency risk, and this product is for them,” Rozenauers says.

Retail investors can enter the Five Arrows Discovery Global Hedged Fund with a minimum investment of $10,000, while on the wholesale side the Rothschild Discovery Wholesale Hedged Trust is available with a minimum $100,000 investment.

Rozenauers says no targets for fund size have been set, but rather that it will be a wait-and-see process.

“It will depend on people’s appetite, we will have to wait and see how it goes.”

But she says the lack of competition for fully hedged funds on the market should work in Rothschild’s favour.

“To my knowledge onlyVanguardandMLCoffer a fully hedged product whereas there are a lot of others that are part hedged, between 0 and 50 per cent, to the manager’s discretion,” she says.

The international equity hedged funds will follow Rothschild’s core style approach and, as with Rothschild’s other international equities portfolios, will be managed by Putnam Investments.

While the new hedged funds will offer protection against the Australian dollar appreciating, Rozenauers says Rothschild is not trying to add value to investment returns through hedging.

“We recognise that currency management is very difficult. Our aim is to add value by selecting quality shares over the long term,” she says.