IFX opens way to foreign exchange

IFX Capital Markets has introduced a multi-manager product providing UK retail investors with access to the foreign exchange market, which it regards as the alternative asset class of the future.

The firm says the FX market was traditionally designed to make it easier for banks, funds and other institutions to trade but over the last five years it has started to be viewed as an asset class in its own right, particularly by pension funds.

High minimum investments meant the FX markets were historically beyond the reach of most retail investors but IFXCM hopes to remedy this with a minimum initial investment of £10,000 for its IFX multi-manager range.

It is targeting an 8 to 10 per cent net return, with a 1 per cent annual charge and 10 per cent performance fee.

It will invest in the FX market on a segregated basis through managed accounts rather than a fund of funds structure. It will initially use six underlying managers but these will be complemented by a reserve list of between eight and 15 managers.

Head of business development Kevin Gillespie says: “We want to construct a portfolio of traders or currency managers that are not correlated so none will lose money at the same time. We decided to use managed accounts because they are more liquid and transparent than a fund of funds.

“A fund of funds comes with trading costs, redemption and subscription costs on a monthly basis. If an investor wanted to leave and others want in, we would have to buy and sell shares if we had a fund of funds but the bid/offer spread would impair performance.”