Mutual Fund Firm Vanguard Files For Hedge Fund

Jan 29 2010 | 12:10pm ET

Mutual fund giant the Vanguard Group is mulling a move into hedge funds.

The $1 trillion firm has filed an application with the Securities and Exchange Commission for an absolute return fund, Morningstar reports. The new vehicle, which would be part of Vanguard’s Managed Payout Funds line, would be an offshore fund, allowing it to invest in a greater variety of alternative strategies. If the application is approved, the new fund would be able to use leverage, derivatives and short-sales.

Vanguard said the other three Managed Payout funds would each invest as much as 20% of their assets in the new fund, and other Vanguard funds could eventually do the same.

The fund is no sure thing: Vanguard first toyed with the idea of launching a hedge fund in 2008, and the Malvern, Pa.-based firm said it might not move forward with the fund even if it should win SEC approval. And that, too, is no sure thing: Vanguard is warning that it could be quite some time before the agency makes a decision.

“We have been doing a ton of work to see whether it’s something we can deliver in a consistent manner, and the jury is very much out at this point,” Vanguard CEO William McNabb told Morningstar. “It’s not something we’re going to do until we feel really great about it.”


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

Concerned About Your HFT Exposure? Hedge It!

Mar 26 2015 | 1:06pm ET

High-frequency trading has been a persistent storyline for several years. The trading...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note