Schroders is taking its first steps into the fund of funds market with the arrival of its private equity fund of funds.
Structured as an investment trust and listed on the Dublin Stock Exchange, the fund is aimed two types of potential clients. The first are institutional investors and the second are high-net-worth investors. Both must be looking for a medium-risk product with a term of between five and 10 years and must have a minimum of £125,000 to invest.
The fund will invest in a minimum of 20 funds, 12 of which have already been chosen. The funds will cover a wide geographical area, with between 40 to 60 per cent in Europe, 40 to 60 per cent in the US and 10 per cent in other areas like Japan. These funds will also cover a broad range of sectors, such as venture capital, management buy-outs and development capital.
Some of the 12 funds chosen so far include Austin ventures VIII, which is a technology venture capital trust based in the US, index ventures II, which is a European information technology fund and the Japan venture fund III, which is a Japanese development capital fund. Schroders has pledged that no more than 20 per cent of the fund of funds will be in funds from the same management group.
A 12-strong group made up of investment advisers from both Schroders and Schroder Ventures will manage the fund, headed by Solomon Owayda. Owayda joined Schroder Ventures in 1997 as an investment specialist. Before that he spent nine years at the California state teachers return system, which is a US pension fund worth £7bn.
Of the 65 Schroders funds on the market at the moment, 11 are first quartile, 14 are second quartile, 20 are third quartile and 17 are fourth quartile, based on £1,000 invested on a bid-to-bid basis with gross income reinvested over one year to September 17, 2001.