TORONTO (HedgeWorld.com)–Pescara Partners started a hedge fund of funds that will invest with both Canadian and international managers, initially focusing on long/short and market neutral strategies.

More styles will be added as assets under management grow, said Raj Lala, one of the Pescara’s two partners. He emphasized that this is an independent fund of funds that holds no ownership stakes in underlying managers. The pool, launched Nov. 26, has assets of C$5 million (US$3.2 million) as of this week.

Mr. Lala and Sergio Simone, the current president of the Canadian Hedge Fund Association, founded the firm some months ago. They both have mutual fund experience and Mr. Simone adds to that his experience as a hedge fund consultant for investment advisers and high-net-worth investors.

The fund’s portfolio adviser is Felcom Management, where Mr. Simone is an investment strategist. He will scout hedge funds and bring appropriate candidates to Felcom’s investment committee, which is responsible for making allocation decisions.

Pescara Fund of Funds is available to Ontario accredited investors. The Royal Trust Company is custodian and PricewaterhouseCoopers is auditor. The fund offers weekly liquidity. It requires a minimum investment of C$25,000 and carries 1.65% management and 10% performance fees.

The partners plan to specialize in funds of funds, which is the most likely type of hedge fund investment for Canadians, said Mr. Lala. They may introduce single-strategy funds of funds at the end of 2003, possibly starting with one that specializes in market neutral. The business was named “Pescara” after Mr. Simone’s hometown, a small fishing village in Italy.

CKurdas@HedgeWorld.com