Ermitage Group is preparing a pair of listed, tax-efficient vehicles giving investors access to its offshore funds of hedge funds.
The two exchangeable bond products—written over a 10-year term—will be issued by Nomura and are set to debut on the London Stock Exchange on June 1. Ermitage created the notes in partnership with consultancy IGS Group.
“These two new products are designed for wealth managers, private banks and sophisticated on-shore investors, giving a wider group of investors the opportunity to access some compelling specialist hedge fund strategies,” Ermitage CEO Ian Cadby said. “Paul Myners, our group chairman, has been a long-term advocate of broadening the accessibility of hedge funds and these products will increase the choice for professional investors based in the U.K., without punitive tax implications.”
The Equity Long/Short Note will track the performance of Ermitage’s European Absolute Fund and North American Absolute Fund, with a 90% allocation to the former and a 10% allocation to the latter. The second bond, the Resources Note, will track Ermitage’s Resources Fund.
The equity funds of funds manage a combined total US$200 million, and their combined annual performance is the note is better than 8% over the past eight years. The Resources Fund, which manages US$110 million, has done even better, returning an annualized 13.7% since its inception three years ago.
The minimum investment required in the notes is £50,000 (US$99,9250).