Sat, Jul 2, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Thesis follows industry trend, launches absolute return mutual fund

Thursday, April 22, 2010
Opalesque Industry Update – The launch of absolute return mutual funds, which seek to combine hedge fund strategies into mutual fund, are increasing in frequency. Described as the latest trend, these funds seek to combine the best of both worlds, allowing more investor access to the diverse and multi-strategy investment approaches found in hedge funds with the daily pricing, daily liquidity and transparency of a mutual fund.

New York-based registered investment advisor Thesis Fund Management is the latest to join the bandwagon with the launch of The Flexible Fund. The fund went live on March 1, 2010 and is now available on mutual fund platforms including Fidelity and Charles Schwab.

In a statement about the launch, Thesis said The Flexible Fund was established specifically to provide alternative strategies to mutual fund investors.

"As a hedge fund manager, I always thought hedge funds would appeal to a large number of investors. Now with The Flexible Fund we can offer every investor the same type of strategies that hedge funds use, in a regulated and familiar mutual fund format," said Stephen Roseman, CEO of Thesis Fund Management.

Early this month, Dreyfus Corporation, a unit of BNY Mellon Asset Management, launched the Dreyfus Dynamic Alternatives Fund, a new mutual fund that also allows investors greater exposure to a wide range of hedge fund returns.p> Another manager, David Marcus, partnered with Eric LeGoff to launch the Evermore Global Value Fund and Evermore European Value Fund last year. Marcus said he saw an opportunity to gain clients who want the flexibility to invest in a hedge- fund-like product without the high fees. The Evermore Funds charge annual management fees of 0.99%. Hedge funds typically charge investors a 2% management fee and take 20% of profits.

Michael Willman, president and CIO of Blue Sky Investment Partners, an investment advisory firm based in Illinois recently told SeekingAlpha.com that many big hedge fund firms are diversifying their client base by creating retail mutual funds that mimic their hedge fund strategies.

Morningstar Inc, a provider of independent investment research, said that there are now 22 funds with “absolute” in their names, up from four in 2005. Among the newer entrants is Putnam Investments, with more than $1bn in a series of four absolute-return funds launched in December 2008.

Over the past few months, the absolute return fund space swelled in size with Legal & General, Gartmore and AEGON which unveiled funds in this space, Moneywise.co.uk reported. Aviva Investors, Old Mutual Asset Managers and Deutsche Bank, are also planning to launch absolute return products later this year.

Hedged mutual funds becoming a dominant trend
In an article, Opalesque reported last year the hedged mutual funds (HMFs) or absolute return funds are becoming a dominant trend in the hedge fund industry. The article cited the working paper released by made by Naik, Agarwal and Boyson, in 2007 entitled "Hedge Funds for Retail Investors? An Examination of Hedged Mutual Funds" (Hedge Fund Centre, London Business School) which predicted that "...hedged mutual funds will play an increasingly important role in the field of investment management as they provide access to hedge-fund like strategies with the fee structure, liquidity, and regulatory requirements of mutual funds." (See Opalesque Exclusive: Hedged mutual funds (HMFs) may be a dominant trend in next hedge fund industry cycle - Part one here and Part Two here ).

Naik, Agarwal and Boyson disclosed that despite their use of similar trading strategies, hedged mutual funds underperform hedge funds. The paper attributed this to the lighter regulation and better incentives available to hedge funds and more importantly because hedge fund managers have more experience in implementing hedge fund strategies.
- Dumlao & Gravrand

Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Soros, Druckenmiller among hedgies profiting in market plunge, Hedge funds were most bullish on bonds since 2004 before Brexit, Surprise Brexit vote unleashes scramble for dollars, High-yield hit on Brexit but no panic selling, Scientist turned hedge fund founder lured to pound, euro, Hedge fund avoids commodities, posts big gains[more]

    Soros, Druckenmiller among hedgies profiting in market plunge From HITC.com: Bullish positions in gold and volatility and well-timed short bets on China and emerging markets, among other areas, were some of the trades that benefited hedge funds on Friday as markets digested Britons' s

  2. Manager Profile - A 26-year old hedge fund manager called Brexit — here's what he thinks about the historic vote[more]

    From Businessinsider.com: Taylor Mann is not your typical fund manager. The twenty-six year old Texas A&M graduate manages Pine Capital in Larue, Texas (population 160), where he resides with his three-year old daughter. Also atypical compared with many of the largest funds out there, Mann makes

  3. Chesapeake Partners to liquidate hedge fund amidst 'hostile environment'[more]

    Komfie Manalo, Opalesque Asia: Chesapeake Partners Management, the hedge fund run by woman fund manager Traci Lerner said it would return investors’ money after 25 years because the market environment has become "hostile" to manage other people’s money, reported

  4. Europe - George Soros says Brexit has ‘unleashed’ a financial markets crisis, Brexit—what we know, Will the UK’s departure be a ‘soft-Brexit’ or a ‘hard-Brexit’?, Brexit: Six-point action plan for asset managers[more]

    George Soros says Brexit has ‘unleashed’ a financial markets crisis From Bloomberg.com: Britain’s decision to leave the European Union has “unleashed” a crisis in financial markets similar to the global financial crisis of 2007 and 2008, George Soros told the European Parliament in Bruss

  5. Hedge Fund Due Diligence Exchange offers complete due diligence reports at $1500[more]

    Matthias Knab, Opalesque: HFDDX is offering complete alternative investment due diligence reports at $1500 US. Industry professionals can simply go to www.hfddx.com and indicate their interest in sponsoring one or more DD Reports for $1500 each.