US investment manager Arrow Funds has launched an open-ended mutual fund, the Arrow Alternative Solutions Fund, which seeks to provide absolute returns via three long/short investment strategies and is managed by the latest addition to the Arrow team, chief investment officer Bill Flaig.
'The unique design of the Arrow Alternative Solutions Fund allows for low correlations to traditional assets with greater diversification, a risk target and controls, using passive investment strategies at a lower cost than most long/short products,' Flaig says. 'It's the best of the mutual fund and hedge fund worlds.'
The fund uses an absolute returns strategy that attempts to lower the volatility that normally arises from market risk. Arrow says the fund's investors will receive the benefits of traditional hedge funds together with daily liquidity, transparency, low investment minimums and SEC regulation. The Arrow Alternative Solutions Fund has a minimum initial investment of USD5,000, or US2,000 for retirement accounts.
The fund seeks to achieve a risk target of 7 per cent and a total rate of return that meets or exceeds 10 per cent per year over a rolling three- to five-year time horizon. Using a systematic quantitative methodology, the fund aims to achieve absolute returns with minimal risk and correlation to the traditional US equity or fixed-income instruments, in a similar way to a hedge fund, through the optimisation of hedged equity, fixed income arbitrage and managed futures strategies.
'The Arrow Alternative Solutions Fund is a perfect complement to our flagship, the Arrow DWA Balanced Fund,' says Arrow Funds executive vice-president Joseph Barrato. 'Both funds are keeping with Arrow Funds' vision - to deliver innovative investment strategies that seek to enhance returns and mitigate risk. We are excited to have Bill on the team given his industry experience in managing and creating alternative strategies.'
Flaig, who has been instrumental in the development of the strategy of the Arrow Alternative Solutions Fund, has more than 15 years of financial services and portfolio management experience. He was previously director of investment strategies at Rydex Investments, where he was involved in the development of the firm's hedge fund replication strategies and the development of the Rydex Absolute Return and Hedged Equity funds.