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

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of