Danske Hedge is preparing to offer its first fund of hedge funds and will likely structured capital guaranteed notes on the fund using over-the-counter derivatives. Andreas Tholstrup, managing partner in Copenhagen, said it will offer the products to Scandinavian and Luxembourgian investors who require the guarantee for tax reasons.
The fund of funds will consist of 15-20 market neutral equity long/short hedge funds, approximately 70% of which will come from the U.S. Tholstrup said he expects the fund of funds to return 3-500bps over three-month LIBOR with a standard deviation of 3-5%. Although he considers the risk profile of this product to be low, and therefore does not warrant a guarantee, it is planning to offer guaranteed products as many potential investors receive tax deductions on guaranteed products. He declined comment on counterparties it would use to structure the derivatives to create the guarantee.
Danske Hedge aims to raise approximately USD200 million through a combination of direct investment and guaranteed products. Tholstrup said it is aiming for a March or April launch, and has been working on the products for over a year seeking internal and external approvals.
Danske Bank has approximately USD60 billion under management.
