Deutsche Bank is planning to bring the first major hedge fund vehicle to the UK IFA market with an Isa-qualifying fund of hedge funds.
The Xavex HedgeFirst fund is set to launch in April, subject to regulatory approval, and will be listed on the London Stock Exchange.
It will aim to offer returns of 12-15 per cent a year but will aim to carry similar risk to bonds.
Deutsche is looking to IFAs as its main distribution channel but the fund will also be offered direct to consumers.
The fund's charging structure is also expected to be different to those of other hedge fund products and more in line with investment trusts.
Initial charges are expec ted to be around 2 per cent while IFAs can charge up to an extra 3 per cent for commission. There will be no performance fee.
Hargreaves Lansdown inv estment manager Ben Year sley says: “This was bound to happen eventually – everyone realises the potential of hedge funds.
“We have been keen on them for a while and are actively looking at ways of putting them in front of clients.”
l Abbey National is also set to make a move into the hedge fund market with three new funds planned for later this year. The funds will be tar g-eted at high-net-worth individuals and institutions.