Goldman Sachs launches hedge fund 'clone'

4 December 2006

Goldman Sachs has become the first bank to create a hedge fund replication tool that will allow investment in hedge funds whilst charging significantly lower fees.

The Absolute Return Tracker (Art) index will charge investors one per cent of their gains, compared with the fees of four to seven per cent commonly charged by funds of hedge funds.

The hedge fund 'clone' works by using an algorithm to aggregate hedge fund data, allowing Goldman to generate hedge fund performance at a fraction of current fund of fund costs.

The new product is also expected to make the trading more liquid, with trading available every day.

"This may be ideal for any large institution that has been looking at hedge funds but doesn't like the fact that it takes six months to put money [in] and to take it out again," the Financial Times quoted Edgar Senior, executive director in Goldman's fund derivatives structuring team, as saying.

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