Arrow launches new hedge product

Date: Tuesday, April 22, 2003

Arrow Hedge Partners Inc. recently launched the Arrow Guaranteed Multi Strategy Series Notes I. The hedge fund of funds is RSP eligible and available to all retail investors for a minimum investment of $5,000. Principle investment is guaranteed if the notes are held for eight years. Although structuring costs of the fund are yet to be determined, Mark Purdy, managing director of Arrow says "it'll be the lowest fee out there for this type of guaranteed product." In addition to structuring costs, the fund has a management fee of 2.5% and a 20% incentive fee. Purdy says the total fees charged by the fund likely won’t exceed 4%. The package of 18 underlying managers are selected by Arrow and diversified across four main strategies encompassing eight different investment styles. The four main strategies include long/short investing, relative value, event driven, and global macro investing. Within the four main strategies, managers invest according to various styles including fixed income arbitrage, equity market neutral investments, merger or risk arbitrage, distressed and high yield investments, geographical, and discretionary strategies. In total, the managers oversee 20 different hedge funds. The fund is available on a deferred sales basis only. Advisors earn a 3% commission, plus 0.50% trailing commission, paid by the company. The fund is available starting May 5, and the offering closes June 10. Purdy says the fund is targeting returns of 7-9% with low volatility and low correlation to traditional stock and bond markets on an annual basis.