Schwager Aims To Work His Magic With LSE Listing

Apr 27 2007 | 1:00pm ET

As politicians and pundits in the U.S. are busy bashing the so-called secretive hedge fund industry, one savvy investment firm across the pond is setting out to prove that hedge funds don’t have to be cloaked in mystery.

The Market Wizards Fund Limited, a Guernsey-incorporated fund of funds, is gearing up to list on the London Stock Exchange next month, and in preparation for the IPO the firm has retooled its seven-year-old vehicle to make it completely transparent to investors.

“We have changed the structure for the purposes of this listed entity into a single trust,” says Simon Hopkins, managing director of U.K.-based Fortune Asset Management, which runs the fund.

The new fund has appointed 27 separate trading advisors, all of whom trade exclusively in liquid assets that can be priced daily, such as equities, derivatives, forex, futures and options.

According to Hopkins, the new structure for the Market Wizards Fund will make it an even more liquid, transparent and safe investment than the existing fund, and it is aimed at those investors who want to trade regularly but don’t want to be hampered by a discount to net asset value.

“Because we price it on a weekly basis with a hard weekly NAV, there won’t be the uncertainty that surrounds permanent capital vehicles,” he explains. “Problems sometimes occur in the hedge fund industry because you don’t know what the underlying manager is doing.”

The fund is being managed by New York-based Jack Schwager, a well-known hedge fund industry veteran who penned a best-selling book back in 1989, also called Market Wizards. But while Schwager is located in the U.S., the revamped Market Wizards Fund is not open to stateside investors just yet.

“We are going to be creating very soon a U.S. feeder fund designed specifically for U.S. investors,” explains Hopkins, who adds that the feeder fund will be structured as an open-ended vehicle and should be available on or around June 1.

Since inception in 1999, the Market Wizards Fund has posted annualized returns of 12.4% (as of the end of 2006).

The close-end Market Wizards Fund is slated to begin trading on the LSE on May 14, and the offering is being capped at ₤200 million (US$400 million). The minimum investment in the fund is ₤10,000 (US$20,000) and it is open to both retail and institutional investors.

“It is by and large a non-directional, market neutral trading strategy,” adds Hopkins. “It is something that should do well in the event that markets take a tumble.”


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