BOSTON Dec 30 Hedge fund firm Gottex Fund
Management is readying a new mutual fund that will let
retail clients sample asset classes normally reserved for
millionaires, like hedge funds, private equity and real estate.
The Gottex Endowment Strategy Fund (GTEAX) will be available
for purchase later this week after it invests its $100 million
in seed capital from the Swiss firm by December 31.
Gottex, founded by Joachim Gottschalk in 1992, becomes the
latest firm to tap into growing demand from investors for
portfolios that promise to make money in good times and bad by
being less correlated to broader markets.
"This will allow investors to get access to a wide range of
markets, trading strategies and alternative investments in a
controlled environment," William Landes, senior managing
director at Gottex and the fund's chief investment officer said
in an interview in Boston.
A minimum investment of $1,000 will get investors a mix of
funds, including ones run by Tremblant Capital and Marketfield
Asset Management, plus many others, Landes said.
Gottex, which has run a similar fund for institutional
investors since 2008, this month announced plans to buy Arpad
Busson's EIM Group in a deal that will boost assets to roughly
The new fund's annual cost will be 1.6 percent, and while
that is double what investors pay for Fidelity's Contrafund, it
is less than the 2 percent management fee plus 20 percent
performance fee most hedge funds charge.
"It is certainly an attractive pitch to get access to what
millionaires can access for much less," said John Longo, a
professor of finance at Rutgers University and chief investment
officer of wealth advisor MDE Group.
"Investing in hedge funds makes sense now," he added. "But
it is also important to compare prices."
Landes said the new fund expects to mimic endowments where
the average annual return is 12.9 percent over the last 20 years
compared with an 8 percent return of a stocks-and-bond
With its new product, Gottex is joining a growing list of
fund firms now tapping into investors' demands for portfolios
that are less correlated to broader markets. Until recently,
hedge funds and private equity and real estate were off-limits
to retail investors because they were deemed too risky and
expensive, often requiring a $5 million minimum investment.
Researchers at Goldman Sachs counted roughly 400 so-called
liquid alternatives funds, including offerings from Blackstone
Group and Arden Asset Management which are both being
distributed through Fidelity Investments, and said roughly
one-third of them were launched within the last two years.
For funds-of-funds now facing a decline in high-end business
because institutional investors such as pension funds prefer to
make direct hedge fund investments, funds for retail customers
may prove lucrative.
Investors are expected to warm to these types of funds
quickly, sending as much as $2 trillion into them over the next
five to 10 years, Goldman forecast in a recent research report.