NEW YORK (HedgeWorld.com)--Alternative Management Group plans to launch its first principal protected hedge fund for U.S. investors, combining the attributes of a CPPI structured note and a zero coupon bond in an absolute return offering slated to hit the market in September.
Called Hedge Fund 2011, the fund essentially is buying the return of an eight-year bond and the returns of 18 underlying hedge fund managers, said Michael P. Tracy, managing partner at AMG. The fund is being offered through AMG's Structured Products Group and is invested via managed accounts that are sold through broker dealers and registered investment advisers.
"As far as I know this is the first offering of its kind through the brokerage community," Mr. Tracy said. "And so far we have had a very warm response."
AMG chose LJH Global Investments LLC, Naples, Fla., as the hedge fund advisory firm that is selecting the underlying managers that are active in seven hedge fund strategies. Those strategies include: equity market neutral, long/short equity, fixed-income arbitrage, event driven, global macro, commodity trading advisers and convertible arbitrage.
LJH was selected at the end of a nine-month search process that culminated in at least a dozen interviews after which LJH stood out, Mr. Tracy said. The firm's experience in retail offerings and structured products in addition to LJH's track record were what set the adviser apart from the rest. Through separate partnerships with London-based Attica Asset Management and Bank Frick, a Liechtenstein-based private bank, LJH is managing assets for a hedge fund index certificate and a guaranteed note linked to the performance of a multi-strategy hedge fund of funds portfolio Previous HedgeWorld Story.
The AMG structured product venture also includes partnerships with Societe Generale, Lyxor Asset Management and Westrock Advisors. Societe Generale provides the principal protection on invested capital. As part of the deal, Lyxor Asset Management monitors daily trading within each individual fund and offers total transparency on each fund. Meanwhile, Westrock is a full service broker-dealer and is the placement agent for Hedge Fund 2011.
AMG is targeting U.S. accredited investors for the new fund, which is linked to the performance of a Class B&C Principal Protected Equity Linked Bond that offers weekly liquidity subject to the liquidity of the underlying funds. The investment minimum for the 2011 fund is US$50,000, and the bonds will be offered from Sept. 2 through Oct. 31 and will mature on Oct. 31, 2011.