Monday, 14 December 2009

Flows to Liquid and Branded FoFs or all FoFs? carried this story today:

Deutsche Bank’s Hedge Fund ETF Reaches $1 Billion Mark
December 14, 2009

The db x-trackers db Hedge Fund Index ETF has reached more than US$1 billion in assets under management since its launch in January of this year. The exchange traded fund that tracks the asset class via an index.

"The db x-trackers Hedge Fund Index ETF is the first of its kind to provide exposure to the performance of actual hedge funds. It is not a hedge fund replicator,” explains Stephane Farouze, global head of hedge fund derivatives at Deutsche Bank. “With the introduction of the ETF we have enabled investors to access an important portfolio component in a new way. Underlying the index is a diversified pool of hedge funds from the, transparent, risk-monitored and liquid Deutsche Bank X-markets Hedge Fund platform.”

Thorsten Michalik, head of db x-trackers at Deutsche Bank adds, "Besides investing into actual hedge funds, the intra-day liquidity is clearly a unique advantage of our Hedge Fund ETF - daily volumes of over 50 million Euros are not unusual. We’re aiming for the db x-trackers db Hedge Fund Index ETF to become the world’s most recognized product for transparent and liquid investments into Hedge Funds."

The db Hedge Fund Index is asset weighted to the hedge fund industry and linked to the range of hedge funds available on Deutsche Bank’s X-markets Hedge Fund Platform.

The db x-trackers db Hedge Fund Index ETF is available in US Dollars, British Pounds, Euro and Swiss Franc share classes and is now listed in the UK, Germany and Switzerland.

From Simon Kerr:
This story says something constructive, but is it constructive about the HF industry or Deutsche Bank? In isolation the story says somethings about the power of DB marketing of financial products. But Friday also saw Europe’s third largest hedge fund firm, BlueCrest Capital Management, announce that they had raised £101 million ($164.5 million) through a new share issuance for its BlueCrest AllBlue fund.The publically-listed BlueCrest AllBlue fund now manages approximately £440.3 million, and serves as a feeder fund for the BlueCrest's fund of hedge funds vehicle.

The confluence of the two stories gives a sense of something emerging - liquid forms of funds of hedge funds with some branding are attracting interest? The corollory should be net positive inflows to funds of hedge funds in general. If we don't see that in 4Q flow data, does that mean that the old form of fund of hedge funds really has peaked (as a proportion of the industry assets)?

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