Arden offers second fund where Main Street can try hedge funds

BOSTON Tue Feb 4, 2014 2:44pm EST

BOSTON Feb 4 (Reuters) - Arden Asset Management, which has been offering retail clients at Fidelity a way to sample hedge funds for more than a year, is branching out with a second mutual fund that will give other brokerage customers similar access to top hedge fund mangers.

Arden, which manages $6.1 billion for pensions and large institutional clients, launched its Arden Alternative Strategies II fund this week, a little over a year after rolling out a similar fund with mutual fund giant Fidelity.

For as little as $1,000, investors will be able to gain access to hedge fund industry powerhouse firms D.E. Shaw Investment Management, York Capital Management, CQS (US) and eight other fund firms, regulatory documents show. Arden plans to cap fees at 1.99 percent.

The New York-based firm, founded by 21 years ago by Averell Mortimer, is also rolling out a similar product abroad, aiming to appeal to investors in Japan and Europe.

Most hedge funds require at least a $1 million commitment, making them popular with pension funds and institutional investors but generally off limits for retail clients. Hedge funds generally charge a 2 percent management fee plus a 20 percent performance fee. They also require clients to leave their money locked up for months or even years.

So-called hedged-mutual funds, which can use the types of strategies including short-selling normally reserved for hedge funds, are gaining traction with investors and advisors as they look for diversification since the 2008 financial crisis.

And they may become even more popular now that the stock market is pulling back with the Standard & Poor's down 5.13 percent this year after a 32 percent surge in 2013.

Goldman Sachs, Blackstone Group, Alpha Capital Management, Neuberger Berman and Hatteras Funds and many other firms offer their own version of these types of portfolios. Arden's first fund as well as Goldman and Blackstone's funds all have over $1 billion in assets. The new Arden fund has $40 million in assets and will be marketed to registered investment advisers, among others.

Over the last 12 months Arden Alternative Strategies I has returned 5.12 percent, data from Morningstar show.

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