Cheyne Launches Regulator-Friendly Convertibles Hedge Fund

Sep 16 2009 | 11:59am ET

With new rules for European alternative investment firms looming, two of the biggest are preparing themselves for the brave new world.

Following a similar announcement from the Man Group last week, Cheyne Capital said it launched a new onshore hedge fund on Friday. The Cheyne Select Convertibles Fund complies with Europe’s UCITS III protocol; such funds will not be covered by the European Union’s proposed hedge fund rules, currently being debated in Brussels.

“We are delighted to be adding Cheyne’s diverse range of product offerings with the launch of this new convertibles UCITS product,” Cheyne CEO Jonathan Lourie said. “It represents an attractive opportunity for a wider range of investors to access this exciting strategy.”

A wider range, indeed: The minimum investment on the new fund is just US$100,000 or £100,000.

Cheyne’s new offering, the first of a series of UCITS-compliant funds planned by the London hedge fund, will invest in convertible bonds. It will have a long-bias, but also the ability to go short when it sees fit. The firm is readying similar macro and credit funds for launch within the next year.

The new fund is regulated by the Irish Financial Services Authority, and employs JPMorgan Chase as administrator and custodian.

Last week, Man announced plans for an onshore, UCITS-compliant version of its flagship AHL strategy. AHL Diversity will give investors access to the coveted strategy for a minimum investment of just £100 (US$165.40), though they’ll pay higher fees than Man’s hedge fund clients. In addition to the traditional 2% management fee and 20% performance fee, investors in the new UCITS fund will pay a 70 basis point structuring fee.

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