Deutsche’s DWS moving into hedge funds
GERMANY - DWS Investments is moving into hedge funds, and expects to sell one billion euros of its new products in 2004.
Following the new investment law in Germany which allows single hedge funds to be sold, Deutsche Bank unit DWS is preparing for the launch of several funds for the beginning of January 2004.
“We want to be one of the first movers in this market,” said a spokesman for DWS.
The company’s strategy is two-fold. It will launch two funds of hedge funds for private and institutional investors – one low-risk, and one high-risk. DWS is also launching single hedge funds, which will be sold as private placements.
DWS plans to use its current expertise in currencies, collateral debt obligations and active stock picking within the new hedge fund business.
DWS’ current equities head Klaus Kaldemorgen will also take on the role of head of hedge fund business.
As part of the Deutsche group, DWS Investments will receive advice on risk strategies and organisation for the new products from Deutsche Bank’s 150-strong absolute returns team.
The spokesman said that DWS Investments expects to sell one billion euros of the new products in 2004.
The 170-page draft of the new Investment Law which contains the hedge fund legislation was issued by the government in July. The section regarding the regulation of hedge funds proposed the first legal framework for hedge funds in Germany, as hedge funds are currently unregulated. The draft was passed by Germany’s lower house three weeks ago, and is expected to be approved by the upper house in the coming weeks.
The proposals will allow single hedge funds to be invested in via “private placements”, while hedge funds of funds will be available to retail and institutional investors. No distinctions will be made between domestic and foreign funds, and nor is it planned to restrict certain strategies - both leveraging and short selling will be permitted.