F&C launches derivatives-based fund

Date: Friday, October 10, 2008
Author: Joel Dimmock, Reuters

F&C Asset Management Plc said on Thursday it had launched a new derivatives-based fund to open up strategies used in its Sapphire hedge fund to more investors.

The F&C Active Return Fund will be managed by Stephen Crewe and Chris Childs and will target returns of 2-4 percent per annum over short-term money market rates, net of costs, and with low volatility.

Fund launches have been thin on the ground while the credit crisis grinds on and as asset managers are stung by heavy redemptions. Many in the industry also suggest larger investors will tend to shy away from complex, derivatives-based products.

An F&C spokesman said the firm was not expecting a rush of investors in the current climate. He said the fund was being pushed out after requests to replicate the strategies used by the Sapphire fund from multi-managers and discretionary managers with restrictions on where they can invest.

Unlike a hedge fund, the Active Return fund will have daily single pricing, a simple fee structure and daily liquidity. It will include derivatives focused on developed market equities, predominantly in Europe and the United States, with a bias to larger cap indexes where liquidity is greatest, even in times of market stress.

F&C has been put up for sale by its parent company, UK insurer Friends Provident (FP.L: Quote, Profile, Research, Stock Buzz), but last month Friends played down the prospects of a deal in the current climate.