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Fund offers diversification options

THERE was a time when the words “hedge fund” would cause a severe twitch and perhaps a raising of the eyebrows of most advisers, and certainly among clients.

At the time we were witnessing the demise of long-term capital management and a variety of flow on effects that were less than predictable.

Now, Macquarie Funds Management has released a new trust that seeks to offer individuals a way to diversify their investments by gaining exposure to a diversified portfolio of hedge funds.

The Macquarie Apollo Trust will hold debt instruments issued by an Australian bank or Australian subsidiary or branch of an international bank. In addition, the trust will hold a portfolio of international hedge funds.

The term of the investment is five years, with maturity in June of the year 2006.

There is a possibility of annual redemptions but there are restrictions that do apply. The capital you invest is protected, therefore so long as you keep the investment to maturity, there will be no loss of capital.

Given that this is a new trust, it has no performance history to look at. However, a simulated performance analysis produced an average after-tax return of 15.2 per cent per annum.

Investors in this fund can gear their investment by borrowing 100 per cent of the investment through Macquarie Bank. The minimum investment in this fund is $10,000.

The fund is an interesting addition to a portfolio. It provides the capacity to gain access to the generally volatile “hedge fund” market without the prospect of loss.

Obviously, as with any of this type of investment, it is essential that interested parties seek independent advice and obtain a prospectus. As a concept, however, the trust provides a new product opportunity for interested parties.

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