NEW YORK -- Deutsche Asset Management is spending $300 million to seed six new hedge fund strategies, said Eric F.S. Pai, managing director, who will oversee the program.
Most of the strategies will be internally managed and one or two will be subadvised, Mr. Pai said in an interview.
Deutsche already has seeded a global macro strategy fund and by midsummer expects to roll out a convertible bond arbitrage strategy, which will be subadvised. A long-short opportunistic equity strategy and a relative value fixed-income strategy also are scheduled to be up and running by midsummer. A risk merger arbitrage strategy is likely for later in the year, while the sixth strategy has yet to be determined, said Mr. Pai, who is considering various possibilities, including a statistical equity arbitrage strategy.
He explained that Deutsche Asset Management, New York, inherited $900 million in hedge funds from Deutsche Bank's acquisition of Bankers Trust Co. in 1999.
"There are two funds of funds and a third fund that is internally managed in an equity opportunity strategy," said Mr. Pai, who declined to say how much money is in each strategy. The investors have been high-net-worth clients, but now Deutsche is branching out and marketing the new strategies to institutional investors.
The plan is to institute strong risk controls and provide investors with the kind of transparency that hedge funds rarely offer. Mr. Pai said he expects to provide frequent detailed reports on liquidity and exposure to equity and currency movements. Also, he will monitor the hedge funds to be sure the managers are sticking to their strategies.