Swiss private bank Pictet has launched a new index, the BVG Indices 2005 (also known as the LPP Indices 2005), which includes an allocation to hedge funds.
The Pictet BVG Index, which is closely followed by Swiss pension funds and is its de facto benchmark, is designed as a series of indices that now includes hedge funds for the first time. Depending on the index, the hedge fund allocation ranges from 2.5% to 7.5%.
FTSE Hedge, the investible hedge fund index, has been chosen to represent the hedge fund allocation after a lengthy selection process.
"Hedge funds increase the investment options available to investors, and are suitable for overall portfolio diversification. We included hedge funds in recognition of these facts", said Pictet in their recently released paper ("Pictet BVG Index", November 2005).
The Swiss pension industry represents some of the most progressive investors globally, and its total assets exceed USD 450 billion. While hedge funds have long been part of institutional asset allocations, it is expected that the index inclusion will solidify this trend.
The MSS Group is licensed by the FTSE Group to manage the FTSEhx Fund SPC, whose returns generate the performance of the FTSE Hedge Index Series. MSS stated: "An investment in the FTSEhx Fund SPC now allows investors to cover the hedge fund allocation with no tracking error to the FTSE Hedge Index Series, and it is expected that a number of related instruments will be launched shortly, specifically designed for Swiss and other European investors. More information will be made available in the coming months."
The MSS Group was founded in May 2001, and is a London-based provider of alternative investment products. The FTSEhx Fund SPC is domiciled in the Cayman Islands and managed by MSS Fund Management Ltd. It has share classes denominated in US Dollars, Sterling, Yen, Euros and CHF.
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