Low-Cost Mutual Fund Giant Thinking Hedge Fund

Dec 7 2007 | 12:24pm ET

The Vanguard Group, the mutual fund giant best-known as a proponent of low-cost, index-based investing, may be getting into the hedge fund business—the opposite of low-cost, index-based investing.

In a filing about its planned Managed Payout funds of funds, Vanguard mentions a “prospective absolute return fund” for the Managed Payout products to invest in, mutual fund watchdog Morningstar reports. The proposed “private investment fund” would not be set up as a mutual fund, and would utilize multiple strategies—including relative value and arbitrage—and multiple asset classes, as well as such un-mutual fund tactics as short sales and leverage.

The filing makes clear that Malvern, Pa.-based Vanguard, which manages more than $1 trillion—more than $100 billion of which is in one fund tracking the Standard & Poor’s 500 Index—has not definitively decided to create a hedge fund.

Should it, however, the Vanguard hedge fund would be used to further the goals of the three Managed Payout funds, which are designed to both increase investor capital as well as pay monthly distributions.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.