Bank of N.Y. Eyes Hedge Fund for Cautious Investors
Ackermann, Matt, American Banker
Bank of New York has started a hedge fund, its first aimed specifically at affluent, but conservative, bank investors who have as little as $1.5 million of net worth.
Ivy Asset Management Corp., the alternative investment unit of the New York bank, unveiled the Ivy Multi-Strategy Hedge Fund on Thursday. The product is the first Ivy-managed hedge fund registered with the Securities and Exchange Commission. Ivy's 19 other proprietary funds are mostly available to investors with at least $5 million of net worth. The unit manages $6.8 billion of assets.
Larry Simon, the president and chief executive officer of Ivy Asset Management, said the new fund is carefully structured as an "all weather" fund of funds to ease conservative bank investors into the alternative investment market.
"Our minimum investment is $100,000; we really have no desire to go down the food chain," he said. "Other financial service organizations may be more retail-oriented. Others are offering alternative investments to clients with $25,000 to invest. We don't have that desire."
The new fund will be distributed through the bank's asset management and private-client units. It will also be distributed through Lockwood Financial, a managed account firm that Bank of New York bought last October. The bank also said it is in talks to distribute through third-party brokerages.
Half the fund's 22 managers invest in low-risk hedging strategies, Mr. Simon said; 30% invest in event-driven or special situations, such as mergers and acquisitions, high-yield bonds, distressed companies, and spinoffs; and 20% are long-short equity managers who focus on protecting assets in a down market.
This "product's conservative approach was created to achieve more consistent returns," he said. "By using these three core strategies, we want to produce consistent returns with low volatility."
Analysts said hedge fund companies have been left scrambling for the right product since the boom in alternative investment products leveled off in mid-2002. …