AUSTRALIA - INVESCO in Australia is launching a multi-strategy fund that will combine a variety of portable alpha strategies within one overall strategy which has a return target of eight to 10% over a cash-based benchmark.
The fund will be offered to Australian investors first in October before a global fund is rolled out for North American clients in early 2007, said Peter McClelland, head of INVESCO’s Sydney office.
“The fund will comprise about 14 underlying strategies, including global tactical asset allocation – which actually comprises five of the underlying strategies, market selection strategies, long/short equity strategies and a highly diversified fixed income component,” McClelland said. “These 14 strategies were identified with the goal of providing as consistent a performance as possible.”
The fund is designed to bring together strategies that are uncorrelated which will produce returns with a low tracking error and high information ratio, McClelland noted. It is being marketed to INVESCO’s institutional clients and has an initial anticipated capacity of US$1bn.
The attraction of the fund is that it is one single vehicle, unlike a fund of hedge fund, meaning there is only one layer of fees, McClelland added.
“The strategy will be offered on a performance fee basis and clients will only pay a performance fee if the total strategy outperforms,” he said.
“An additional benefit is that because the strategy is provided by one manager, access to the underlying information on each strategy is far more straight forward and transparent, and this is something we believe is important for clients.”
INVESCO is introducing the fund in Australia first because most of the 14 underlying strategies are already operating as funds in Australia, meaning it was less difficult to develop the multi-strategy single fund there first. The global vehicle will most likely be Dublin-
domiciled, McClelland said.
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