Deutsche Bank To Offer Mass Market Hedge Fund

by Carla Johnson, Investors Offshore, London

26 June 2002

Deutsche Bank's fund management arm Deutsche Asset Management is attempting to launch a fund of hedge funds which will have registration with the SEC allowing full retail distribution and marketing like conventional mutual funds.

Although many funds have now obtained the looser form of registration with the SEC which allows marketing only to so-called 'eligible investors', ie people with demonstrated wealth or professionals, mostly in order to tap into the institutional market for investment, this will be the first time that a hedge fund obtains registration under the broader 1933 rules, giving access to the broader mass market.

The new closed-end fund, DB Hedge Strategies Fund, has an investment minimum of $50,000, according to the filing, and will be distributed by Scudder Distributors Inc., Deutsche's US retail unit. There will be a 3.5% up front sales fee, a 1.95% annual asset-based investment management fee and a 0.25% administrative fee. As in all funds of funds, investors indirectly pay any asset-based and performance-based fees of the underlying hedge funds. The fund will invest in 15 to 40 hedge funds that use a variety of "absolute return" investment strategies.

Deutsche Bank acquired Zurich Scudder Investments for US$2.5 billion late in 2001, adding Scudder's asset base of US$350 billion to its own $650 billion to become the fourth largest asset manager in the world.

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