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Life Health > Life Insurance

Prudential starts retail hedge fund wager at Quantitative unit

By Doni Bloomfield and Noah Buhayar

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(Bloomberg) — Prudential Financial Inc. the second-largest U.S. life insurer, is introducing a product to allow retail investors to bet with strategies favored by hedge-fund managers.

The Global Tactical Allocation Fund can invest in commodities and currencies in addition to stocks and bonds, and may wager on gains or declines in securities, Prudential said in a statement Tuesday. The strategy targets lower volatility than the Standard & Poor’s 500 Index. The fund will be overseen by Prudential’s Quantitative Management Associates, or QMA, which has about $118 billion in assets under management.

“Investing in a dynamically managed portfolio with the ability to take long and short positions within and across asset classes may result in more stable returns across various market conditions,” Newark, New Jersey-based Prudential said in the statement.

Insurers like Ameriprise Financial Inc. and New York Life Insurance Co. have been adding more complex offerings to attract retail clients. The products also generate higher fees than funds that track stock and bond indexes.

The minimum initial investment for the new Prudential fund shares is $2,500 in most cases, and subsequent purchases can be made for $100, according to a summary of the strategy. QMA focuses on the use of “advanced analytics” according to the statement, and has more than 50 investment professionals, including 19 with PhDs.

Ameriprise’s Columbia Management announced an agreement in November to join with Blackstone Group LP to increase access to hedge fund strategies. New York Life Insurance Co. in April completed the purchase of IndexIQ, pushing into exchange-traded funds that bet on so-called alternative holdings.

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