Paulson Joins Trend With Launch of Retail Fund

Paulson & Co, the hedge fund group famed for making billions from the collapse of the US subprime mortgage market, is to launch a new fund open to retail investors that will track its existing investment strategies.

John Alfred Paulson, president of Paulson & Co., Inc.
TimSloan | AFP | Getty Images
John Alfred Paulson, president of Paulson & Co., Inc.

Hedge fund investing is typically restricted to wealthy individuals and institutions only. But the new fund, which will be constructed as a so-called “Ucits” structure, domiciled onshore in Europe, will be open to anyone.

The fund will launch later this year, according to people familiar with the move, and follows a wave of similar set-ups from European hedge fund managers.

Paulson & Co is one of only a handful of US hedge fundsto launch a Ucits version of its strategies, however.

US interest in the structures – which are more tightly regulated than traditional hedge funds, but freely open to retail investors in the same way that mutual funds are – has been growing. As a product regulated by an existing EU directive, Ucits funds will be exempt from the onerous new rules to regulate hedge fund managers currently under consideration by EU lawmakers.

Paulson & Co’s new fund will be launched in conjunction with Deutsche Bank , which already operates a sizeable Ucits fund platform designed to repackage hedge fund products.

Paulson & Co, the world’s third largest hedge fund group, and Deutsche Bank declined to comment.

Other US fund managers that have already launched Ucits products include York Capital and Highbridge Capital Management.

European counterparts have been piling into Ucits for some time.

The $19bn BlueCrest Capital, one of London’s biggest hedge fund managers, raised $600m earlier this year – the largest single amount raised for a Ucits hedge fund – for a version of its algorithmic BlueTrend fund. Other prominent launches have included those of GLG, Man Group’s AHL, and Winton Capital.