Forsyth Partners, the UK-based investment and research company, launched its third hedge fund product this week.
The new Cayman-domiciled Forsyth Alternative Income Fund aims to pay an indicative initial gross yield of 7 per cent from a diversified portfolio of fixed interest hedge funds and sovereign, corporate and emerging market bond funds.
Forsyth Partners already runs two other hedge fund products: A multi-strategy hedge fund called the Forsyth Diversity Fund, launched on 1 November 2002; and a fund of long-short equity funds, called the Forsyth Equi-Beta Fund, launched on 29 December 2000.
Paul Forsyth, Chief Executive of Forsyth Partners, said:"The Forsyth Alternative Income Fund has been developed as a direct result of the feedback we received from following the launch of the Forsyth Diversity Fund. There is clearly a need for a fund that offers a good yield together with prospects of capital growth but which does not take on disproportionate levels of risk".
Mr Forsyth said: "We believe that a portfolio utilising a blend of fixed income hedge funds and sovereign, emerging market and corporate bonds offers an exciting and innovative solution to the question of income.''
Forsyth Alternative Income Fund will pay dividends twice a year, in March and September, and will be available in four share classes - sterling, US dollars,
euros and yen - all of which will be fully hedged. Dividends will be paid from income received by the Fund, supplemented by the realised capital gains.
Mr Forsyth added: "We will maintain a strict discipline when it comes to the payment of dividends. Although it is our intention to maintain this level of income we do not intend to erode initial capital in order to fund future dividend payments. Consequently we will review the dividend on a regular basis."
Forsyth Partners will use its extensive fund research facilities to help identify the appropriate fund managers from the universe of over 6000 hedge funds.
Rossen Djounov, Managing Director Research & Investment Management, who will take day-to-day responsibility for the portfolio, said:"Qualitative research is the bedrock of our business; we interview and analyse over 6000 fund managers each year so we can apply proven techniques to identify the managers who have the potential to deliver sustainable investment returns.
Mr Djounov added: "Of course, hedge funds are notoriously difficult to analyse closely but, as buyers of hedge funds, we enjoy a much greater degree of access which, in turn, means we can get closer to the investment approach".
"The market in fixed interest hedge funds is relatively new but is attracting an increasing level of attention from institutions and we think it now offers real potential for investors.''
The Forsyth Alternative Fund is an open-ended fund domiciled in the Cayman Islands and dealing will be twice monthly. Bermuda Trust (Dublin) Limited is the Fund's custodian and administration services will be provided by Management International (Dublin) Limited.
The minimum investment in Forsyth Alternative Income Fund is USD 20,000 and dealing will be twice monthly. Forsyth will pay a placement fee of up to 3 per cent to advisers for business introduced and trail fees are also available.
The annual management fee is 1.25 per cent and a performance fee of 20 per cent is payable on returns in excess of 7 per cent per annum.
The initial offer period commenced on Monday 10 March and closes on Friday 14 March.
Background Note: Forsyth Partners is an independent financial services group with offices in the UK and Jersey, together with sales and marketing operations in the Arabian Gulf, Malta, Hong Kong and South East Asia, with a representative office in Barcelona. Its clients extend to over 450 companies in over 40 countries.
In the UK, Forsyth specialises in the international mutual funds industry through the provision of fund research and investment management services for investment professionals. It is dedicated to fund of fund portfolio management.
In Jersey, it offers discretionary portfolio services, trust and company services and structured products for high net worth and institutional clients.
In addition to its hedge fund products, Forsyth Partners offers a range of 11 managed and specialist fund of funds.