Lehman to launch alternative asset allocation fund - EXCLUSIVE

The fund, which was seeded by the asset management firm earlier this year, will invest in private equity, hedge funds, real estate and commodities.

Around half of the fund will be allocated to Lehman managed funds of externally managed funds and around half to directly managed Lehman funds or products.

Lehman said it would use a process called "factor analysis" to allocate cash between alternatives, making sure the investments complemented schemes’ equity and bond investments.

It said there would be no overall fee for asset allocation and noted product fees would be "competitive" with those of standard fund of funds in private equity and hedge funds.

Lehman Brothers Asset Management senior vice-president for UK institutions Nick Spencer said: "Many schemes want to increase their alternatives allocation but then face the problem of putting a programme together.

"This will enable smaller and mid-sized schemes to access this breadth of alternatives with a single allocation."

Despite this, Spencer said the fund would not be suitable for all schemes, noting that although the product would make it easier for schemes to invest in alternative investments, it would not remove the characteristics of the underlying investments.