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Rating:Un(discovering) Absolute Returns Not Rated 3.0 Email Routing List Email & Route  Print Print
Friday, March 23, 2001

Un(discovering) Absolute Returns

Reported by Tamiko Toland

Undiscovered Managers is looking to turn the hedge world on its ear. The firm is currently developing a fund of funds that will allow unlimited investors.

"We think we've got a vehicle that we think will do it," said Mark Hurley, president and chief executive officer of the firm. He was unable to elaborate on the details of how Undiscovered Managers plans on forging the Holy Grail of the hedge industry.

Hurley said that such products are coming into high demand, under the current market conditions. The firm works with advisors, whose one percent management fee starts to look more daunting to consumers as returns diminish. A hedge product with more stable returns can offer just the value-added that clients expect. The new product is being developed with the help of some of the firm's clients and is slated for a later summer release.

As Undiscovered Managers responds to market shifts among its clients, it is making several adjustments within its own product line-up.

The firm is dropping C shares from its funds. The share class, designed to help transaction-based advisors transition to a fee-based model, has run its course with the firm.

"All of our clients have already bridged it," explained Hurley. "They're going right over into the institutional class."

Hurley pointed out that the fund's investors have only $5 million in C shares, and will be offered the opportunity to switch into another class or redeem shares.

In another housekeeping measure, Hurley said the firm is closing three funds. With the recent addition of two products and another in the works, the firm shuttered the Behavioral Long/Short Fund on March 2 and the Core Equity Fund on March 15, according to an SEC filing. The All Cap Value Fund does not appear in the same filing but no longer appears on the firm's site.

"Our clients, increasingly for large cap, are using private accounts," explained Hurley. "Mutual funds are primarily for the smaller capitalizations."

One smaller capitalization strategy that never took off was the long-short fund, but the foundering fund never found its footing.

"We have one niche product, a long-short strategy, that hasn't taken off," said Hurley. "The manager's a great manager, but it was a niche strategy."

 

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