UK - HSBC Investments has launched a life wrapped pension hedge fund product aimed at small- and medium-sized final salary schemes.
HSBC Investments’ (UK) head of institutional business development Julian Lyne said: “The combination of the fund of funds structure and the life wrapper now makes it much simpler and more transparent for these pension schemes to invest in hedge funds.”
The underlying holding is the HSBC Global Absolute Limited fund of hedge funds product, which invests in up to 40 hedge funds and launched in 2001.
Minimum initial investments in the new product start at £100,000, with an annual management fee of 1.25%. A 10% performance fee is applied if three month returns hit Libor plus 3% pa.
The underlying fund is listed on the London Stock Exchange and as an institutional share class, benefits from daily dealing. Discount control mechanisms, share buy back and redemption limit the risk of shares trading at a large discount to its net value.
Lyne added: “Pension fund managers are increasingly recognising the benefits that hedge funds offer, but only the very large schemes have the resources or expertise to select their own diversified portfolio of hedge funds.”
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The vast majority of JLT Employee Benefits' clients have moved to the new equalised basis since the consultancy enabled pension schemes to calculate transfer values to allow for guaranteed minimum pension (GMP) equalisation.
Investors, driven by depressed interest rates, slower global economic growth and rich equity market valuations are examining non-traditional investment opportunities.