Collins Stewarts range of Guernsey-based Hirzel House funds is growing with the introduction of the absolute return fund.
A multi-manager fund of hedge funds, the absolute return fund is aimed at conservative investors who are new to the world of hedge funds, looking for a product that offers average returns for medium risk.
The aim of the fund is to achieve long term capital growth, with returns of between 10 and 12 per cent a year and as little volatility as possible.
It will invest in a range of 25 hedge funds that cover a number of different investment strategies. These include long funds, short funds, market neutral funds, which take both a long and short approach. The fund will also invest in distressed securities, which are stocks in companies that are in financial trouble but which show signs of making a recovery.
Absolute return is one of a pair of new fund of hedge funds introduced by Collins Stewart. The second fund, the Hirzel House absolute return plus fund has a higher level of risk and offers returns of between 15 and 20 per cent.
Following the increase in market turbulence in January and February 2001, many product providerss created new hedge funds as these followed strategies that avoided it. However, the risks must be understood by the investor, as hedge fund managers are trying to outguess the market. In March 2001, the Personal Investment Authority issued regulatory update 85, in which it recommended that IFAs should explain to their clients the risks involved in what can be a complicated product.