Dresdner Kleinwort Wasserstein said the hedge fund tracker certificate it will launch tomorrow on the London Stock Exchange will be the prelude to a number of structured offerings designed to bring the asset class to the retail investor.
A spokesman was unable to give further details, but said the covered warrants department that has developed the product has also been involved in Dresdner Kleinwort Benson structured products, including a recent commodity product based on the DJ AIG Index, and a directional hedge fund tracker product.
HFRX Global Hedge Fund Tracker Certificate (LSE code D092), will be the first hedge fund-linked certificate to trade on the London Stock Exchange. It is structured as a three-year zero-strike call, giving a tracker-like exposure to HFR’s broad hedge fund index, HFR Global Index.
DRKW has issued around £1m to cover initial demand, and will expand the issue if demand should warrant it.
“It’s a question of accessibility,” said head of covered warrants Shahzad Sadique. “We are trying to bring the hedge fund world to the retail investor.” The Certificate has daily liquidity and settles like a share in T 3 (3 days after trade date).
The warrants will be priced in pence and issued at a price determined by the index, anticipated to cost around £6 at launch. Minimum purchase is one unit. An annual index replication fee of 2%, based on daily index values, is deducted at maturity. The index is calculated in US dollars, and the product is converted into sterling at maturity.
