JP Morgan Fleming Launches Retail Hedge Funds

by Carla Johnson, Investors Offshore, London

16 October 2002

J P Morgan Fleming Asset Management announced yesterday that it is launching two hedge funds with a retail orientation. Pending authorisation from the FSA, JPMF will market its Global Socially Responsible fund to the retail market place before the end of 2002, and a Luxembourg-based European Market Neutral Fund will follow.

Adam Fairhead, head of product development for JPMF, said: "We have seen much client demand for an SRI fund from intermediaries and asset managers and believe our range of funds needed an ethical offering." The fund will follow the FTSE4Good MSCI index, which will apply passive screening globally across the index.

JPMF's European team will manage the JPMF European Market Neutral fund, which will be based in Luxembourg but will be sold mainly through asset managers and fund of funds providers in the UK.

Mr Fairhead said: "Although this is the first time we are going to launch hedge funds into the European retail market, we are not pandering to the trend to do something new but have launched both of these products to meet client demand." He said that JPMF was experiencing much interest in both products, saying that people were much less wary about using hedge funds at the moment as they looked to diversify out of the equity market.

The minimum investment is GB£6,400 for the SRI fund, and GB£35,000 for the hedge fund. IFA commission levels on the funds are yet to be confirmed.

The Luxembourg fund will be run as a SICAV. JPMF's Luxembourg-domiciled fund range comprises four SICAVs, with each SICAV containing a range of funds covering a variety of markets and sectors. Investors can switch between different funds under the same or different SICAV quickly and cost-effectively. A SICAV (Societe d'investissement a capital variable), is an open-ended vehicle having a variable capital which is always equal to the net asset value of the fund.

JPMF says it is one of the largest managers of actively managed investment funds in the world with close to US$550 billion of assets under management across Europe, the Americas and Asia.

Domestic European hedge funds targeting European investors are usually based in offshore centres such as the Cayman Islands, British Virgin Islands or Bermuda, but are listed in Dublin rather than Luxembourg, because the Irish offshore centre has less stringent authorisation.

Hoeever Luxembourg has increasingly been the choice of US mutual funds looking for a European base. A study conducted by London-based fund research company, Fitzrovia International, showed that US mutual fund organisations had grabbed market share in Luxembourg-based funds from their European rivals, increasing their assets in the jurisdiction by 69% at the end of 2001.

Recommended