GLOBAL - Barclays Global Investors (BGI) is planning to unveil a new global absolute return fund targeted at smaller pension funds and aimed at generating higher alpha.
The absolute return fund will be a multi-strategy pooled fund combining various hedge fund products and strategies offered by BGI.
Currently, the manager has around $9.5bn in around 20 different funds which will now be combined into the new absolute return product.
Hugh Cutler, managing director, UK strategic accounts, said: “We are seeing a lot of interest in absolute return funds and so we are in the process of creating a fund that brings together all of our ideas for alpha, for outperformance, into one absolute return fund.
“It’s all BGI’s hedge funds rolled in together into one single strategy that has everything in it.
“Various products and strategies such as market neutral, tactical asset allocation and credit long/short will be offered in this fund so that clients can get a single off-theshelf product.”
He added: “I think for clients, at least for smaller clients, they want all the best ideas in one fund.
“They don’t want to have to go about making separate decisions about US equities or UK equities or currencies or credit.
“This way they get the best information ratio – the least amount of risk for higher returns.”
The new product would be targeted at the manager’s liability driven investment (LDI) clients as well as other pension fund clients, he added.
Cutler said that he sees an exponential rise in LDI, once new regulatory measures in the Netherlands and the Nordic region come into force.
BGI has 12 clients managing around £14bn in LDI mandates.
Of these, £5bn are in swaps and £9bn in physicals. With the new FTK framework coming into effect from 1 January, 2006, some of the small and medium sized
Dutch pension funds have already started the move into liability driven instrument vehicles.
Cutler says that of the £14bn LDI assets, nearly a third is from the Dutch market.
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