Quant. Firm QS Readies $1 Billion Inflation Hedge Fund

Aug 19 2011 | 4:51am ET

Deutsche Bank’s former quantitative trading team is raising an inflation hedge fund with hopes of garnering $1 billion.

QS Investors, which spun off from Deutsche Bank last year, said the new fund would serve as an inflation hedge by investing in global bond and currency forwards. The New York-based firm, which has more than $13 billion in assets under management, plans to launch the Liquid Alpha Fund later this year, Dow Jones Newswires reports.

“Investors are already nervous about their bond holdings,” CEO Janet Campagna said. “The real yields are already negative in some markets like the U.S., so investors are not able to cover current inflation.”

Liquid Alpha will deliver on at least the first part of what it promises: The fund, which will be UCITS III-compliant, will offer daily liquidity.

QS spun off from Deutsche Asset Management’s DB Advisors through a management buyout last August. All 40 of the team’s members moved to the new firm.

Campagna told Dow Jones that QS’s first year as an independent shop has been a successful one, which assets under management up by $2 billion and the firm’s four existing funds rising between 1.6% and 5.9% through July, although she admitted that this month’s market bloodbath had taken a toll on those returns.

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