Sophisticated high-net-worth clients are being targeted by the Frank
Russell Company to invest in the alternative strategies fund.
This offshore Oeic aims to produce ret-urns of between 10 and 15 per cent
a year.It invests in hedge fund strategies such as event-driven,
market-neutral arbitrage and long and short selling.
Event-driven strategies take advantage of circumstances such as
stockmarket flotations and takeover bids and market-neutral arbitrage
involves trading between different securities issued by the same company.
Long and short selling is where overvalued securities are sold by the fund
manager, who intends to buy them back at a lower price.
Global stockmarkets tend to follow the same direction and as a hedge fund,
the alternative strategies fund is independent from this movement, which
may be an advantage given recent volatility.
Some hedge fund strategies are not as volatile as stockmarket investments,
but this does not mean they are low risk.
The alternative strategies fund tries to reduce risk by using 14 different
managers who use different investment strategies. However, investors must
be prepared to take a gamble on the fund manager making the right choice to
buy or sell securities at the right time.