WILMINGTON, Del. (HedgeWorld.com)–Wilmington Trust is planning to sell a public Securities and Exchange Commission-registered hedge fund, the Wilmington Low Volatility Fund of Funds.
The multi-strategy hedge fund will be managed by Wilmington unit Rodney Square Management Corp. and subadvised by fund of funds firm Guidance Capital LLC, Chicago. Guidance recently was named sub-adviser of four planned registered funds in the works at the firm Aspen Strategic Alliance, Atlanta .
Wilmington officials declined to comment on the fund because of registration rules.
As the fund’s name implies, the managers will seek out consistent long-term returns with low volatility, investing in a broad range of hedge fund strategies spread among 15 to 20 different hedge funds, according to the SEC filing on the fund. Included strategies are: convertible arbitrage; fixed-income arbitrage; managed futures; merger arbitrage; what the filing calls balanced long/short equities; distressed securities; private placements; capital structure arbitrage; index arbitrage; special situations; and volatility arbitrage, according to the filing.
Management fees paid by the fund to Rodney Square and Guidance amount to 1% of assets plus an incentive fee of 10% of returns over a hurdle rate set by a rolling 12-month geometric average of three-month U.S. Treasury bill rates. Rodney Square and Guidance have agreed to waive a portion of management fees in order to keep fund annual expenses capped at 2% of assets until December 2014, with Guidance waiving a maximum of 50 basis points, its total fee on the fund, the filing states.
A maximum sales charge of 5% will be waived for clients of Wilmington Trust and its affiliates, and there is a 1% redemption fee for shares held less than 12 months.
Rodney Square also is administrator to the fund, though PFPC Inc. was hired to perform selected administrative functions. Pepper Hamilton LLP, Philadelphia, will serve as legal counsel, while the Philadelphia office of Ernst & Young LLP will act as fund auditor, the filing states.
The fund is structured as a Delaware trust. Wilmington and its affiliates manage US$31 billion.