Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Portfolio > Alternative Investments > Hedge Funds

Schwab Unveils Hedge-Focused Mutual Fund

Your article was successfully shared with the contacts you provided.

SAN FRANCISCO (–Charles Schwab & Co. Inc. has begun selling a mutual fund that looks more like a hedge fund.

The Schwab Hedged Equity Fund is being sold as a retail version of a hedge fund, offering equity long/short investing, the possibility of leverage and a minimum investment of US$25,000.

The fund joins a growing list of public and private closed-end funds and mutual funds that cater to individual investors who want hedge fund-like performance but may not have US$1 million to invest in them.

The Schwab mutual fund is separate from its hedge fund choices offered in private placements, said Lance Berg, a Schwab spokesman. He declined to discuss them. The Schwab fund is available to anyone, though Mr. Berg said that Schwab recommends investors buy into the new fund only if they have US$250,000 in investable assets.

The fund will be managed by Robin Jackson, senior vice president for Schwab Capital Markets LP, and Elie Spiesel, vice president, electronic trading, both of whom joined Schwab when it bought the hedge fund firm Bunker Capital Management LLC in 2001. They’ll be making long and short trading decisions using Schwab’s A through F stock rating system and will be overseen by Geri Hom, vice president and senior portfolio manager for Charles Schwab Investment Management Inc. The fund will invest in about 200 equities at a time managed with optimization techniques.

The management fee is 1.75%, and total annual expenses will be 3.52%, according to the prospectus. Schwab is waiving a portion of the fees, though, in order to keep net operating expenses capped at 2% through Sept. 3, 2003, according to the prospectus.

Schwab’s fund isn’t the first mutual fund to adopt hedge fund strategies. Among the firms offering hedge fund-like strategies in a mutual fund are: Boston Partners Asset Management LP, Boston; Montgomery Asset Management LLC, San Francisco; and AXA Rosenberg, San Francisco. In addition, a startup fund manager, Alternative Investment Partners LLC, Chappaqua, N.Y., is working to offer a retail mutual fund that will take a hedge fund of funds approach, the Alpha Strategies I fund.

Other fund managers offer registered closed-end funds that are being sold to retail type investors, though most of those are being sold to investors with minimum net worth requirements. Among them are: Montgomery Partners, a unit of Montgomery Asset, CIBC World Markets, and Tremont Advisers Inc.*, Rye, N.Y.

Mr. Berg said that it’s possible additional mutual funds with hedge fund strategies will be introduced, but he couldn’t name anything specific.

*Tremont Advisers Inc., Rye, N.Y., is a strategic partner of, and a minority investor in HedgeWorld.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.