Sydney-based hedge fund manager Vertex Capital will soon launch a new fund targeting Australia's retail investors for the first time. According to Rebecca Jacques, associate director at Vertex, the new fund will focus on exclusively Australian stocks but unlike existing funds will not use any shorting techniques. Instead, the strategy will employ the use of derivatives and options. Vertex expects to hire a new derivatives specialist to join the team and monitor this approach.
Upon its initial launch the new fund will be limited only to wholesale investors, but Vertex expects to be able to open it to retail investors within six months.
"Wholesale sophisticated investors will still be our primary market. Our decision to expand into the retail segment is more a business diversification strategy. It is good for us to have a mixed investor base in the long term," says Jacques.
Vertex is currently in discussions to form an alliance with a partner that has built the infrastructure and has the existing distribution network to market the new fund to the retail public. Jacques says the partner may well be a global institution with a strong Australian presence.
Australia has an active retail market for hedge funds and enjoys significant trade flows compared to other markets in the Asian region. Vertex will join existing retail market hedge fund players including K2, Hedge Funds Australia and PM Capital.
Vertex's agenda for business expansion has also been reflected in the recent appointment of Charles Macek as a non-executive director of the firm. With over 30 years of experience in the financial services sector, including the retail investor segment, Vertex is hoping to draw on his expertise as its business enters a new stage.
"His insights will help Vertex as we broaden our investor base and expand our product suite," says Kim Ivey, managing director at Vertex.
Macek replaces Chris Pederson who resigned as non-executive director in August 2003.
"Chris' expertise in international stock broking did not really fit with the direction in which we were taking the business. Moreover, he was also in the process of building his own business so it was difficult for him to dedicate his attention to Vertex's expansion as well," says Jacques.