Signet to launch hedge fund of funds

New Hedge Fund Launch

Published in, November 2006 Edition

LONDON (Citywire) - Signet Capital Management, the fund of hedge funds provider, is to launch its first closed-ended fund, which will invest in hedge funds that trade debt globally, such as government and corporate debt.

The trust, called Signet Global Fixed Income Strategies, will be Guernsey-domiciled and listed on the Dublin Stock Exchange so that it can redistribute gains back to investors in the form of a dividend.

The trust, to be launched on November 27, will also be traded on the London Stock Exchange and will be brought to market by investment bank Evolution.

Signet believes the trust will be attractive to UK investors because it will have daily liquidity and it can be put in a tax efficient wrapper, where gains made are taxed to capital instead of income because it is a listed equity.

The trust will distribute 50 percent of its gains as a dividend, up to a maximum of 5 percent per investor. The remainder will be entered into a dividend reserve, which will be paid out in future years to 'smooth' dividend payouts. For example, if the trust earns 12 percent over one year, 5 percent will be paid out to investors and 2 percent will be put into the reserve.

Seymore Banks, the director of Signet Capital Management, said: "Obviously, others have launched investment trusts into this area before. The issue is that unless you come up with something unique, it is a bit of a crowded space. We believe we have done this by launching a fixed-income fund of hedge fund product."

The trust hopes to attract a minimum of 35 million pounds, but Banks says that its final size could be anything from 40-100 million pounds.

The annual management charge is 1.5 percent, which decreases to 1.25 percent if more than a million is invested, and falls further to 1.1 percent is the amount reaches over 5 million pounds.

(c) Citywire Financial Publishers Ltd 2006.

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