WEST PALM BEACH, FL (www.hedgeco.net) – Fidelity Investments is set to offer two new products, which the company is not calling hedge funds, but the new strategies, Fidelity Active Strategy funds, orFAST will be utilizing hedge fund like strategies for trading according to news reports. The new strategies will allow its managers to use tools available to hedge funds, Fidelity said.
This latest move points to the convergence of hedge funds and mutual funds. Both industries differ in some respects, while the SEC regulates the mutual fund industry; hedge funds traditionally have avoided the SEC oversight until late last year, when the SEC voted to regulate some aspects of the US hedge fund industry.
The Fidelity Active Strategy (FAST) funds will be devoted to European and Japanese equity markets. The new products were recently introduced into the markets, and they will allow its managers to � use index derivatives, borrow to make bigger investments, and short sell securities.�
Alex Homan, associate investment director at Fidelity Investments in London, said, “It’s a new idea and an area we are interested in, and as people become more comfortable, we may move to allow managers more flexibility … At the moment they can gear up to 20 percent of the fund’s assets.”
Fidelity however noted that, �Unlike hedge funds, the FAST funds will not be offering investors absolute or real returns, but relative returns against benchmark MSCI equity indices for Europe and Japan.� And Fidelity is not classifying the FAST funds as hedge funds.
The new funds will charge annual management fees of 1.5 percent and 20 percent incentive fees. The performance fees according to Fidelity will only be assessed if the fund manager beats the equity benchmark by two percent over a three-year duration.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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