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Rating:Oppenheimer Courts Institutions with Hedge Funds Not Rated 4.0 Email Routing List Email & Route  Print Print
Tuesday, January 21, 2003

Oppenheimer Courts Institutions with Hedge Funds

by: Sean Hanna, Editor in Chief

Oppenheimer Acquisition Corp. is betting that institutional investors will find more comfort in doing their hedge fund investing through a registered product than directly with the hedge fund managers. Its ante into the game is a pair of new products that exploit its Tremont Advisors affiliate on the behalf of OppenheimerFunds.

The firm launched the first two offerings -- Core Diversified Hedge Fund and Market Neutral -- under the newly created OFI Tremont Institutional Hedge Fund Series brand at the start of the year. Both funds are open only to tax-exempt, institutional investors. That opens the offerings to the pension fund, foundation and endowment market. It is unlikely that 401(k) plan sponsors would be interested in the offerings.

OFI Institutional, an arm of OppenheimerFunds, will market the new funds, said Chuck Mckenzie, chief marketing officer for OFI Institutional Asset Management. The funds require in initial investment of $1 million and additional contributions of at least $100,000.

Tremont said it structured the new funds as investment companies under the Internal Revenue Code as a way to avoid unrelated business taxable income. Tax-exempt investors may be liable for this tax if they invest in hedge funds through domestic limited partnerships.

John Hock, Tremont's head of Global Sales, added that by registering as investment companies the funds would also offer "the degree of risk transparency required" by institutional investors.

Each of the fund-of-funds invests in roughly 15 managers. They will also use RiskMetrics Group's Hedge Platform to provide aggregate risk at the manager and fund of funds level.  

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