Hedge fund service provider PlusFund Group Inc. announced last week the creation of single strategy baskets of funds mirroring the eight of the nine strategies present on the S&P Hedge Fund Index.
In a recent statement, PlusFund explained to prospective investors that whilst the funds are not sub-indices of the main S&P 500 Fund Index, the baskets are intended to be utilised as individually investable units via a managed account, and attempt to reflect the strategies in both make up and size.
The S&P Hedge Fund Index was born in November 2002 and was created to reflect a broad-based and investable mirror of the hedge fund market. The nine major strategies are categorised into three main groups comprising Arbitrage, Event-Driven and Directional/Tactical. Forty institutional quality managers make up S&P Hedge Fund Index.
"The end game will be for the development of investment products that will allow investors to use these individual building blocks to actively manage their exposure profile in the hedge fund space," explained Christopher Sugrue, PlusFunds chairman.
"Investment products based on these narrower baskets provide investors exposure to specific styles pursued by the institutional quality managers in the broad S&P Hedge Fund Index," expands Sugrue, continuing: "This 'best of both worlds' scenario would allow investors highly targeted allocations within an index-linked environment."
Commented Paul Aaronson, Executive Managing Director at Standard and Poor's: "We are pleased to see the success of the S&P Hedge Fund Index give rise to new and innovative products like those that PlusFunds is offering through these style baskets. PlusFunds has developed a creative way for investors to gain additional access to the index while managing their exposure."
The eight individual strategies are outlined below:
| Macro | Versatile strategies which use political/economic and quantitative analysis to capitalize on various investment opportunities. |
| Equity Long/Short | Long/short equity strategies invest in both long and short positions in equities to benefit from market movements in both directions. |
| Merger Arbitrage | Seeks to exploit the price disparity from merging companies, typically by taking a long position in the target company and a short position in the acquirer. |
| Distressed | Invests in debt or equity of companies that are facing financial distress. |
| Special Situation | Capitalize on special events such as spin-offs, corporate reorganizations and restructuring. |
| Fixed Income | Capitalize on pricing discrepancies in fixed income instruments by taking arbitrage positions between similar bonds, possibly at different points along the yield curve. |
| Convertible Arbitrage | Seek to exploit anomalies in prices between convertible securities and common stock of the same company. |
| Equity Market Neutral | Seek to create a portfolio with little or no directional exposure to the market by taking long and short positions which are neutral to the overall equity market. |
http://www.plusfunds.com/9ShareClasses1May.pdf
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