Collins Stewart is boosting its presence among offshore investors with the Hirzel House absolute return plus fund.
This hedge funds of funds aims to produce long term capital growth with returns between 15 and 20 per cent a year. It invests between 20 and 35 hedge funds run by different fund managers. These hedge funds will cover a range of styles and strategies.
One of the most popular hedge fund strategies is the long and short equity strategy. This involves fund managers buying stocks when their value is low and selling them when the price rises, with the intention of buying them back again when the value increases again.
Although hedge fund strategies are useful in that returns are not affected by volatile stockmarkets, they can be risky as the wrong decision by the fund manager will have a negative impact on the investment.
The high level of return could make theHirzel House absolute return plus fund attractive to sophisticated investors who are looking for aggressive growth. It could also be used by investors who want an adventurous element in their portfolio, but they would need to be aware of the risks they are taking.