HSBC Alternative Investments is joining the UCITS III rush with a new fund of hedge funds.

The bank will launch its Ucits AdvantEdge fund this month. The new vehicle will seek to take advantage of the credit crisis, investing in underlying managers who specialize in discretionary macro, equity-market neutral, managed futures and equity long/short strategies, the Financial Times reports.

But the new fund will also cater to the skittishness of investors in the wake of the financial crisis: It will offer weekly liquidity and features strict limits on leverage, counterparty risk and types of securities traded.

“The hedge fund industry is emerging leaner and fitter as weaker participants close down, leaving the surviving providers to reap the rewards from their more robust platforms this year and next,” Tim Gascoigne, global head of portfolio management of HSBC AI, told the FT. Speaking to fears about the effect of impending hedge fund regulation in the European Union, Gascoigne noted, “the fund will allow a wide range of both onshore and offshore investors to participate in the hedge fund sector.”

“The important thing is that it is regulated, and this vehicle offers weekly liquidity,” Gascoigne added.

Gascoigne said the new fund would include only blue-chip fund managers, including approximately 25 names within the next four months. Initially, the fund, which is denominated in euros, will be marketed to offshore investors. But HSBC plans to begin targeting European investors by the end of this year or early next year.

The fund has a €25,000 (US$36,800) minimum investment requirement. State Street serves as its administrator.