Barclays Global Investors (BGI) has joined the rush to provide hedge funds to investors with the roll out of its own product, the BGI equity market neutral fund.
The fund will be available to retail investors through fund of fund providers as well as institutional investors. BGI says the fund will aim to deliver a return of 7 to 8 per cent per annum above the cash rate.
The fund will also have a net exposure of close to zero to equities and will generate returns by taking long and short security positions.
BGI director of equity investments Morry Waked says long-short investing is growing in popularity with investors who see the benefits in this style of investing.
“Alternative investments are something that are gaining a lot more momentum recently and certainly there is a basis for superannuation funds to allocate some of their assets to alternative investments,” Waked says.
According to BGI, the fund will generate stable returns to investors that are not linked with equity or bond market returns and in the current interest rate environment, this would mean more than a 12 per cent total return product.
“If a long/short equity fund can deliver 7 or 8 per cent above the cash rate, that’s a total return of 12 to 13 per cent, [which] is not a bad investment in the current environment.”
BGI says the fund should outperform cash in a risk controlled manner through diversification and holding balanced long and short positions across a range of industries and styles.
The announcement of the new fund in Australia is in line with BGI’s strategy world wide, with the group having recently launched long/short market neutral funds in the US, the UK, Canada, and Japan.
Hedge funds have been grabbing more headline space in recent months with Colonial preparing to roll out funds later this year and Deutsche having already launched two funds in the last 12 months.
Hedge Funds Australia (HFA) has also indicated it will expand its offerings into the institutional market while Frank Russell and Alliance Capital have also made offering into that market since the start of the year. They will be keeping good company with Schroders and Credit Suisse already making moves to gain some market share in that sector.
