BOSTON Blackstone Group LP, one of the world's biggest investors in hedge funds, is preparing to launch a portfolio that will give retail investors a taste of these normally exclusive funds.
New York-based Blackstone, best known as a private equity shop, filed registration documents with the Securities and Exchange Commission earlier this week to launch the Blackstone Alternative Investment Funds.
The new offerings will put money into alternative investments including global macro strategies, opportunistic trading strategies, quantitative strategies and managed futures strategies, the regulatory filing says.
Investment advisors, consultants, broker dealers and other financial intermediaries will be able to offer the funds to retail clients, the registration statement says.
The move comes at a time when investors - including the ultrawealthy, who have long had access to hedge funds - are now balking at the high fees that many hedge fund managers charge while delivering only modest returns.
Normally hedge funds charge a performance fee and a management fee. Mutual funds traditionally charge only management fees.
"People just don't want to put up with the lockups and the layers and layers of fees," said Brad Alford, chief investment officer at Alpha Capital which offers two hedged mutual funds.
The Alpha Opportunistic Growth fund and the Alpha Defensive Growth funds are ranked as the top performers in this space by industry research firm Morningstar.com.
Blackstone, which already has two closed-end mutual funds that are publicly listed, did not yet specify how much investors will need to commit to this new offering or how much it will earn in fees.
With the filing, Blackstone becomes the latest firm to offer retail investors access to alternative investments.
Kohlberg Kravis Roberts filed registration documents in July for two mutual funds and BlackRock has been in the market with retail alternatives funds for more than a year.
Large firms are moving quickly to satisfy investors who are demanding better investment options as well as to diversify the way they make money at time deal-making has been slowing.
(Reporting by Svea Herbst-Bayliss, editing by G Crosse)