CLOSE FUND MANAGEMENT
Close Man Hedge Fund
Capital-protected fund of hedge funds
Growth linked to the performance of a portfolio of hedge funds
Lump sum £10,000
100% in hedge funds
Eight years and six months
13%-15% growth a year
Original capital returned in full regardless of performance of under- lying investments
Place of registration:
Annual up to 3%, performance fee 20%
June 18, 2004
Initial up to 3%
Tel: 0800 269824
Close Fund Management has teamed up with Man Investments to offer a capital-protected fund of hedge funds that provides a full capital return regardless of the performance of the underlying hedge funds.
Informed Choice technical director Martin Bamford thinks this is one of the most attractive hedge fund products around at the moment but complains that the charges are too high.
He says: “This product aims to produce absolute returns of 13-15 per cent a year net of management fees. It offers clients exposure to this asset type with the added comfort of capital security at maturity. The multi-strategy investment approach offers the potential for positive returns in a variety of market conditions. There is no currency risk involved as the fund is denominated in sterling, unlike a number of hedge fund products available. There is also the opportunity to redeem the investment on a quarterly basis at net asset value.”
Bamford is critical of the charges, especially the management charges which could be as high as 3 per cent a year. But he adds: “This would be more of a concern with a traditional investment fund but is not too much of a worry in a fund that aims for such a high level of absolute return.”
Bamford feels the quarterly encashment opportunity might be seen as a little inflexible for some investors. He also points out that Man Investments is experienced at managing this type of fund but this product does not have a track record.
Considering which products are likely to provide the main competition for the Close Man Hedge Fund Bamford says: “There is a wide range of hedge funds available without this type of capital guarantee attached, and some on offer from GAM and New Star provide good competition.”
Summing up Bamford says: “This is a good opportunity to diversify an investment portfolio without taking undue levels of risk with your capital.” He concludes that the minimum investment level of £10,000, sterling denomination and backing from Royal Bank of Scotland, make it an attractive product.
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Good