RPT-Morgan Creek offers fund for retail clients to taste hedge funds
By Svea Herbst-Bayliss
NEW YORK, Sept 16 (Reuters) - Morgan Creek Capital Management, which invests with hundreds of hedge funds, is now giving retail clients access to these normally exclusive portfolios through a mutual fund.
Morgan Creek, based in Chapel Hill, North Carolina, is the latest investment firm to jump into the so-called hedged mutual fund business, with a portfolio called the Morgan Creek Tactical Allocation fund, the firm said on Monday.
Two months ago Blackstone Group, one of the world's biggest hedge fund investors, rolled out a similar portfolio and teamed up with Fidelity Investments, which will be offering it to some of its clients.
The new fund will be run by Mark Yusko, who previously headed the University of North Carolina's endowment, and founded Morgan Creek in 2004. The firm has $6.5 billion in assets.
The new offering comes after Yusko stepped down as chief investment officer of the $3.5 billion joint-venture Endowment Fund in January.
The Endowment Fund was designed to replicate how successful institutions like Yale University invest and was run by Morgan Creek Capital and Salient Partners, a Houston-based investment firm. Yusko said at the time that he stepped down because of friction over how to run the fund.
The new hedged mutual funds offer investors a taste of big name hedge funds that normally require minimum investments of $1 million or more and can lock up the money for years.
But some industry analysts have been critical of the new class of funds, saying that the industry's top hedge fund managers will have little reason to agree to sign up, leaving the retail investors with little known managers instead of top names.
"There are problems with most of them," Morningstar analyst Nadia Papagiannis wrote about the new portfolios in an Aug. 7 research note.